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icDr. Sean D. Jasso
TA: Dandi Gong
BUS 109 – Competitive and Strategic Analysis
June 11, 2014
Strategic Audit Created by:
Created By: Francisco Rojas, Cesar Guzman, Carmen Martinez,
Brenda Arroyo, Emily Bromann, Olivia Snider, Michael Yuen,
Alejandra Nunez, Ali Raza, Yekta Pishnamaz, Marissa Tenorio,
JingJing Wang
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Table of Contents
CURRENT SITUATION…………………………………………………………………..5
HISTORY……………………………………………………………………………5
FIVE-YEAR FINANCIAL OVERVIEW……………………………………7
CURRENT PERFORMANCE………………………………………………………8
RATIO ANALYSIS…………………………………………………………..9
COMPETITOR COMPARISON………………………………………...….12
INDUSTRY COMPARISON………………...…………………………......13
MISSION………………………………………………….………………………..14
VISION……………………………………………………………..………………14
VALUES……………………………………………………..……………………..15
OBJECTIVES………………………………………………..……………………..15
STRATEGIC POSTURE……………………………………..…………………….18
CORPORATE STRATEGY…………………………..…………………….19
DIRECTIONAL………………………………………………………19
PORTFOLIO ANALYSIS……………………………………………21
PARENTING STRATEGY…………………………………………..24
COMPETITIVE STRATEGY……………………………………………….25
BUSINESS STRATEGY…………………………………………………….26
FUNCTIONAL STRATEGY………………………………………………..27
MARKETING STRATEGY…………………………………………27
OPERATIONS AND LOGISTICS STRATEGY……………………28
CORPORATE SUSTAINABILITY STRATEGY…………………...30
POLICIES……………………………………………………………………………30
WORKPLACE RIGHTS POLICY…………………………………………..31
SUPPLIER GUIDING PRINCIPLES………………………………………..31
GLOBAL MUTUAL RESPECT POLICY…………………………………..31
ALIGNMENT……………………………………………………………………….31
CORPORATE GOVERNANCE…………………………………………………………..33
BOARD OF DIRECTORS…………………………………………………………..33
TOP MANAGEMENT………………………………………………………………44
EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (SWOT)……..55
NATURAL PHYSICAL ENVIRONMENT: SUSTAINABILITY ISSUES………..55
SOCIETAL ENVIRONMENT……………………………………………………..55
ECONOMIC………………………………………………………………..55
TECHNOLOGICAL……………………………….……………………….56
POLITICAL-LEGAL………………………………………………………57
SOCIO-CULTURE…………………………………………………………59
TASK ENVIRONMENT…………………………………………………………..60
THREAT OF NEW ENTRANTS………………………………………….60
BARGAINING POWER OF SUPPLIERS………………….……………..60
THREAT OF SUBSTITUTE PRODUCTS OR SERVICES………………61
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BARGAINING POWER OF BUYERS……………………………………61
RIVALRY AMONG EXISTING FIRMS………………...………………..61
THE 6TH FORCE………………………………………………………….62
EFAS TABLE………………………………………………………………………64
INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES (SWOT)……67
CORE COMPETENCIES………….……………………………………………….67
VIRO ANALYSIS………………….………………………………………………72
BUSINESS MODEL……………………………………………………………….73
VALUE CHAIN…………………………………………………………………....74
CORPORATE STRUCTURE………………...……………………………………79
CORPORATE CULTURE……………………..…………………………………..81
EMPLOYEE DIVERSITY…………….………………………………….82
COCA-COLA AND OTHER NATIONS…………………………………82
CORPORATE RESOURCE……………………..…………………………………83
MARKETING………………………….………………………………….83
MARKETING MIX……………………………………………….85
COMPANY TRENDS…………………………………………….87
ENVIRONMENTAL SUSTAINABILITY……………………….88
FINANCE…………………………………………………………………89
FINANCIAL TRENDS……………………………………………90
FINANCIAL STRATEGIC DECISIONS………....………………91
FINANCIAL COMPETITIVE ADVANTAGE…...………………92
GLOBAL FINANCIAL ISSUES………………….……………….94
THE STRATEGIC MANAGEMENT PROCESS…………………95
RESEARCH & DEVELOPMENT………………………………………..95
OPERATIONS AND LOGISTICS………………………....……………..97
HUMAN RESOURCE……………………………………...……………101
INFORMATION TECHNOLOGY ………………………..……………104
IFAS TABLE……………………………………………………....……………..108
ANALYSIS OF STRATEGIC FACTORS (SWOT)…………………………………...111
SITUATIONAL ANALYSIS (SFAS TABLE)……………………………………111
REVIEW OF MISSION AND OBJECTIVES…………………………………….113
STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY…………..114
TOWS MATRIX……………………….…………………………………………114
STRATEGIC ALTERNATIVES…………………………………………………115
STABILITY STRATEGY…………………………………………....115
GROWTH STRATEGY…………………………………………...…117
RETRENCHMENT STRATEGY………………………………........119
RECOMMENDED STRATEGY…………………………………………………121
CORPORATE STRATEGY……………………………………………….121
BUSINESS STRATEGY…………………………………………………..122
FUNCTIONAL STRATEGY...……………………………………………122
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POLICIES………………………………………………………………….123
IMPLEMENTATION……………………………………………………………………125
IMPLEMENTATION PROGRAM………………………………………………..125
WHAT MUST BE DONE…………………………………………………………125
PROGRAMS ACTIVITIES……………………………………………125
ACTION STEPS……………………………………………………......125
WHO IMPLEMENTS STRATEGY………….………………...........…125
MATRIX OF CHANGE……………………..…………………………129
STRATEGY/FRAMEWORK MAP………………………………….......……......130
EVALUATION AND CONTROL………………………………………………………131
BALANCED SCORECARD……....……….………………………………………131
FINANCIAL………………………………………………………………..131
OBJECTIVES………………………………………….......……131
MEASURES…………………………………………….………131
TARGETS………....……………………………………………131
INITIATIVES……...……………………………………………131
CUSTOMER………………………………………………………………..134
OBJECTIVES…………………………………………………....134
MEASURES………….………………………………….........…134
TARGETS…………….……………………………………........134
INITIATIVES……………………………………………...........134
INTERNAL BUSINESS PROCESS……………………………………….138
OBJECTIVES…………..……………………………………......138
MEASURES……………..……………………………………....138
TARGETS………………..…………………………………...…138
INITIATIVES……………..………………………….................138
LEARNING AND GROWTH…………………………………………….141
OBJECTIVES………….……………………………………….141
MEASURES…………….……………………………………....141
TARGETS……………….…………………………………........141
INITIATIVES………….………………………………………..141
APPENDICES……………………………………………………………………………145
Appendix I…………………………………………………………………………145
Appendix II……………………………………………………..…………………147
REFERENCES…………………………………………………………………………..152
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CURRENT SITUATION
“The world is changing all around us. To continue to thrive as a business over the next ten years
and beyond, we must look ahead; understand the trends and forces that will shape our business in
the future and move swiftly to prepare for what’s to come. We must get ready for tomorrow
today. That’s what our 2020 Vision is all about. It creates a long-term destination for our
business and provides us with a “Roadmap” for winning together with our bottling partners.”
---The Coca-Cola Company
History
Atlanta pharmacist John Pemberton invented Coca-Cola (also known as Coke) in 1886. (Biesada,
2014) The beverage was named after its two main ingredients coca leaves and kola nuts. By
1891 the Coca-Cola Company (Coca-Cola or The Company) was purchased by Asa Candler and
by 1895 the beverage was able all throughout the United States. Three years after it was
available in both Mexico and Canada. In 1960 Coca-Cola bought Minute Maid. (Biesada, 2014)
Additionally, Coca-Cola began launching its new drinks including Fanta, Sprite, TAB, and Diet
Coke.
In 1986 the Coca-Cola Company “consolidated the US bottling operations it owned into Coca-
Cola Enterprises and sold 51% of the new company to the public.” (Biesada, 2014) By 1995 the
value of the company had reached to $145 billion. In 2000 president and COO Douglas Daft was
named the new chairman and CEO of the company. At the same time the Company participated
in its largest cutbacks it has ever done. They eliminated five thousand jobs and paid one hundred
ninety three million dollars in a settlement for a race-discrimination suit that was filed by
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African-American workers. (Biesada, 2014) As of 2001, Coca-Cola’s brand portfolio had been
expanded upon to include teas, juices, and smoothies in addition to carbonated beverages.
In 2003 Coca-Cola experienced trouble in its overseas operations. There were accusations in
Indian that the bottles used by Coca-Cola contained “traces of DDT, malathion, and other
pesticides that exceeded government limits.” (Biesada, 2014) Even though they were cleared of
charges they still suffered a huge loss in profit. In the same year, in an attempt to relate to a
younger consumer audience Coca-Cola launched new marketing and ad campaigns. The
following year Coca-Cola introduced a lime diet coke.
Because of the growing trend to be healthier, fight obesity and have an active lifestyle Coca-Cola
created The Beverage Institute for Health & Wellness. (Biesada, 2014) The institutes served as a
beverage and research operation in order to create healthier alternatives. In addition to this
initiative Coca-Cola along with some of its competitors agreed to sell only water, unsweetened
juices, and low-fat milks to both public elementary and middle schools in the United States.
Furthermore, within high schools they were to sell “no sugary sodas and one-half of the offered
drinks to be water, diet sodas, lemonade and/or iced tea.” (Biesada, 2014)
Within February of 2008 Coca-Cola “acquired a 40% stake in the tea and organic beverage
company Honest Tea.” (Biesada, 2014) The following year Coca-Cola began to move the
“Classic” word on its products. They had added the classic term to their products after a new
coke formula had been used that did not do well. Instead they chose to put the phrase “Coke
classic original formula” on the product packing but it was no longer in a dominant location.
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“In 2010 it bought out the North American bottling and distribution business of Coca-Cola
Enterprises (CCE). The deal was valued at $12 billion (including nearly $9 billion in debt).”
(Biesada, 2014)
Five-Year Financial Overview
Five-Year Financial Overview of The Coca-Cola Co. (Biesada, 2014)
DEC. 2013 DEC. 2012 Dec. 2011 Dec. 2010 Dec. 2009
Revenue 46,854 48,017 46,542 35,119 30,990
Net Income 8,584 9,019 8,572 11,809 6,824
Net Profit Margin 18.32% 18.78% 18.42% 33.63% 22.02%
Stock Price
(FY Close)
41.31 36.25 34.99 32.89 28.50
Total Equity 33,440 33,168 31,921 31,317 25,346
Gross Profit 28,433 28,964 28,326 22,426 19,902
Advertising
Expenses
3,266 3,342 3,256 2,917 2,791
*Monetary values in millions
Every business no matter what their objective, mission or values are they have one thing in
common that being the desire to produce profits. After all the goal to produce profits is why a
business comes into existence. The Coca-Cola Company has been a growth company since it
became a public company in 1919. There is no doubt that the Coca-Cola Company is a powerful
Corporation. Even with the Financial Crisis of 2008 Coca-Cola has continued to grow. With the
exception of a 1 million drop in revenues from 2008 to 2009 the company has continued to grow,
even reaching $48 million in revenue in 2012 after 3 consecutive years of growth in sales (See
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Table). In addition the Company’s stock price has continued to grow reaching 41.31 by the end
of 2013. Of course not everything has remained a steady growth, if we look at table 1 we can see
that there has been a fluctuation in the Net Income. Within the last five years the highest net
income of $11, 809.00M was reached in 2010.
Current Performance
Coca-Cola Co. from a financial standpoint had a slight down year. Its Return on Investment went
from 17.12% in 2012 to 15.08% in 2013. Similarly, Its Net Profit went from $9,086,000,00 in
2012 to $8,626,000,000 in 2013. Nevertheless, even though it did not do as well as the previous
year it still had a relatively solid promising year, especially when you consider the 8.262 billion
dollars earned in net profit.
The Coca-Cola Company (NYSE: KO) is the world’s largest beverage company, refreshing
consumers with more than 500 sparkling and still brands. Our Company and bottling partners are
dedicated to our 2020 Vision, a roadmap for doubling system revenues this decade, focused on
five key areas—profit, people, portfolio, partners and planet.
Coca-Cola history began in 1886 when the curiosity of an Atlanta pharmacist, Dr. John S.
Pemberton, led him to create a distinctive tasting soft drink that could be sold at soda fountains.
He created a flavored syrup, took it to his neighborhood pharmacy, where it was mixed with
carbonated water and deemed “excellent” by those who sampled it. Dr. Pemberton’s partner and
bookkeeper, Frank M. Robinson, is credited with naming the beverage “Coca-Cola” as well as
designing the trademarked, distinct script, still used today. During the first year, sales averaged a
modest nine servings per day in Atlanta. Today, daily servings of Coca-Cola beverages are
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estimated at 1.9 billion globally. Coca-Cola products are sold in 200+ countries with 3,500+
products worldwide. (Coca-Cola Company)
Ratio Analysis
Ratio Analysis (As of 2013)
Coca-Cola PepsiCo Nestle Dr. Pepper
Snapple Group
Current Ratio 113% 124% 91% 109%
Gross Profit Margin 61% 53% 48% 58%
Return on Assets 9.53% 8.86% 8.12% 7.63%
Inventory Turnover 5.35 9.16 5.5 12.59
Debt To Equity (Leverage) 117% 140% 109% 113%
Price to Earnings Ratio 19.56 19.06 18.98 17.39
Coca Cola has recently split its stock in August of 2012, into two sections, one for The Coca
Cola Company and one for The Coca Cola Bottling Company. This split of stock obviously
brought the prices down, however over the last few years and financial quarters, Coca Cola has
experiences growth in it’s stock price. When the stock was split in August of 2012, the stock
price was $37.52, and now it has climbed up to about $41. The stock for The Coca Cola Bottling
company has also reached $76.30. Together, both of these stocks are worth over $110. Which is
more powerful and greater in monetary value of that of Coca Cola’s competitors. Investors can
expect growth in the share price of Coca Cola’s stock.
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Coca-Cola Asset Management (Mergent Online, 2014)
Dec. 2013 Dec. 2012 Dec. 2011 Dec. 2010 Dec. 2009
Total Asset Turnover 0.53 0.58 0.61 0.58 0.69
Receivables Turnover 9.73 9.89 9.96 8.58 9.05
Inventory Turnover 5.63 6 6.34 5.07 4.88
Accounts Payable Turnover 20.48 19.85 19.63 17.62 18.01
Accrued Expenses Turnover 6.48 6.99 6.76 5.82 6.24
Property Plant & Equip
Turnover
3.18 3.26 3.14 2.89 3.47
Cash & Equivalents Turnover 4.97 4.51 4.37 4.52 5.29
Within all of Coca-Cola’s financials we are able to see the steady increase or betterment. In other
words year after year they have continued to become more efficient as a result they produce
higher profits, while reducing cost and waste.
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Competitor Comparison
The table below allows us to see the Coca-Cola Company financial comparison with its top
competitors that include PepsiCo, Nestle, and Dr. Pepper Snapple Group. In annual sales it is
evident that both PepsiCo and Nestle have surpassed Coca-Cola. However the Gross Profit
Margin in Comparison to them far exceeds it. It is evident with comparison to its competitors
that the company still has the potential to grow and expand itself to produce more profits than the
rest.
Competitors’ Financial Comparison - As of 2013 (Biesada, 2014)
Coca-
Cola
PepsiCo. Nestle Dr. Pepper
Snapple
Group
Industry
Median
Market
Median
Annual Sales $46.85B $66.42B $103.73B $6.00B N/A N/A
Employees 130,600 274,000 333,000 19,000 N/A N/A
Market
Capitalization
$181.85B $126.82B $233.90B $9.65 N/A N/A
Gross Profit
Margin
60.68% 52.96% 47.92% 58.33% 52.41% 33.48%
Return on
Invested Cap
12.14% 11.53% 13.71% 10.46% 11.48% 7.33%
The market segment that Coca-Cola operates within is highly competitive. There are numerous
companies all different sizes that have been established within various years. Additionally, many
of these companies including our main competitors operate within various geographic locations.
Products include soft drinks, juices, and waters and enhanced waters that are ready to drink.
Furthermore there are various products that contributed to how competitive they actually are.
These competitive factors consist of “pricing, advertising, sales promotion programs, product
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innovation, increased efficiency in production techniques, the introduction of new packaging,
new vending and dispensing equipment, and brand and trademark development and protection.”
(Annual Report, 2014)
Industry Comparison
Industry Comparison
Coca-Cola Industry Average
Return on equity 25.90% 24.00%
Dividend yield 3.20% 2.8%
Profit margin 18.32% 11.80%
The industry average of the Beverage-Soft Drink industry provides us with a benchmark to
further analyze how Coca-Cola is performing. Looking at Coca-Cola's key statistics and the Soft
Drink Beverage industry average values, we can see that Coca-Cola is slightly outperforming the
industry average in different areas. Coca-Cola's return on equity is almost 2% greater than the
industry average meaning more of its profit is derived from shareholder investments than that of
the industry average. Coca-Cola’s dividend yield is 0.40% higher than the industry average
meaning it pays out more in dividends than other soft drink companies which is attractive to
potential shareholders. Most importantly, Coca-Cola’s profit margin is greater than the average
by 6.52% meaning Coca-Cola keeps about $0.06 more than the average soft drink company for
every dollar of its sales.
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Mission
As stated within our company corporate website our mission is to:
To refresh the world...
To inspire moments of optimism and happiness...
To create value and make a difference.
Coca Cola is in the carbonated beverage industry through refreshing the world by “bringing a
portfolio of beverages that anticipate and satisfy people’s desires and needs.” Coca Colas
mission is to refresh the world in mind body and spirit, to inspire moments of optimism through
their brands and actions and to create value and make a difference everywhere they engage.
Through their seven core values: leadership, passion, integrity, accountability, collaboration,
innovation and quality they have served their customers for over one hundred years which in turn
has greatly contributed to customer loyalty to the Coca Cola brand.
Vision
The vision of the company defines the pillars that allow Coca-Cola to reach their 2020 Vision.
They include:
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 and 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.
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Profit: Maximize long-term return to shareowners while being mindful of our overall
responsibilities.
Productivity: Be a highly effective, lean and fast-moving organization.
Values
Coca-Cola’s values serve as the guidelines to their actions and how they behave in the world.
They include seven different values.
Leadership: The courage to shape a better future
Collaboration: Leverage collective genius
Integrity: Be real
Accountability: If it is to be, it’s up to me
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
Quality: What we do, we do well
Objectives
Corporate Objectives
In the statement from the company’s annual review, CEO, Muhtar Kent, addressed the 6 P's in
order for Coca Cola to complete their 2020 vision. 1. Profit. Mr. Kent discussed how the
company increased volume by four percent with their sparkling beverages growing three percent
and their still portfolio going up ten percent. Coca Cola also generated record net operating
revenues of more than $48 billion and operating income of nearly $11 billion. Over the first three
years of the 2020 vision, Coca Cola has increased daily servings by more than 200 million, lifted
their global volume and value share to the highest level since 2003 and added more than $30
billion to The Coca Cola Company’s market capitalization. 2. People. Coca Cola wants to
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continue making a difference in our communities by volunteering to support worthy causes. In
the past, they reached out to help people in the wake of devastating natural disasters, such as the
flood that occurred in Pakistan and Hurricane Sandy destroying the Eastern Coast of the United
States. 3. Portfolio. To continue studying all opportunities - country by country and category by
category - so that Coca Cola can continue to introduce new products and brands in the following
years. 4. Partners. Coca Cola aims to continue helping the 23 million retail customers sell more
beverages, generate more traffic and revenue and provide for their employees and communities
each week. The company also continues to roll out revolutionary Coca Cola Freestyle fountain
dispensers that have over a hundred beverage options. 5. Planet. Their 2020 goal for the planet is
to bring water neutrality with their community water projects by 2020. The company has
partnered with Dean Kamen, who invented a purification system for communities in need of safe
drinking water, and after successful tests in 2012, they are planning on bringing the technology
to communities in South Africa and two Latin American Countries. The company wants to
continue in reducing their petroleum usage with recyclable plastic bottles that are 30% made up
of plants. Coca Cola also aims to continue improving the distribution of critical medicines in
impoverished countries of Africa, such as Ghana and Mozambique. 6. Productivity. Coca Cola
announced a new organizational structure of three operating businesses: Coca Cola Americas,
Coca Cola International and Bottling Investments Groups in 2012. The Company has also
launched a productivity and reinvestment program to create $550 million to $650 million in
annual savings by the year 2015. By freeing up resources through supply chain optimization,
improved marketing effectiveness, operational excellence and systems standardization, Coca
Cola can invest more in innovation, marketing and additional “feet on the street” to drive their
growth. (MarketLine, 2014)
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Business Objectives
Coca Cola’s business has four main business objectives that include keeping their focus on the
market, working smart, acting like owners and being the brand. In order to keep focus on the
market, they look towards the needs of the consumers, customers and the franchise partners.
They do this by going out into the markets to observe and learn the different behaviors and
feelings towards the products that the people have. For this they possess a world view of the
market. They also keep their focus towards execution in the marketplace on a daily basis. In
order to work smart, Coca Cola directs its employees to act with urgency, remain responsive to
change, have the courage to change course when needed, remain constructively discontent and
work efficiently. The company influences its employees to act like owners by making them
accountable for their actions and inactions, stewarding the assets of the system and focusing on
building value, rewarding their people for taking risks and finding better ways to solve problems
and by learning from their outcomes in the sense of what worked for them and what didn’t.
Lastly, Coca Cola asks its employees to be the brand by inspiring creativity, passion, optimism
and fun. (The Coca Cola Company: Mission, Vision, & Values.)
Functional Objectives
Over the last few years, the demand for more functionality from their food and beverage
products by the consumers has been on a very high rise. The new health-conscious consumers
increasingly favor foods that claim to reduce cholesterol or drinks that claim to boost more
energy or rejuvenate. Health has become a major issue and subject that concerns many
consumers in today’s world. There is a very high influence of “working out” and getting fit and
in shape. People are starting to become more aware of what they consume and the way that their
bodies look. like. While some products, like juices and water are perceived to be naturally
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healthier choices than sparkling beverages, beverage manufacturers are also offering newer
beverages formulated for specific benefits beyond hydration, such as sports and energy drinks.
Coca Cola is making their presence felt in the newly emerging functional beverage market space
by catering to the energy drink consumers. They offer an energy drink that is sold in Vietnam,
which is fortified with six essential B vitamins named Samurai. For drinkers that are involved in
physical activities, Coca Cola offers Aquana, which helps drinkers regain normal hydration
levels after they have gotten active. The more popular energy and sports drink of Coca-Cola in
the United States is PowerAde, and it is scientifically formulated with ION4 Advanced
Electrolyte System, which helps replenish sodium, potassium, calcium and magnesium. The
company believes that increasing the demand for functional beverages is bound to help the
company to boost the sales of its energy and sports drinks categories. (MarketLine Company
Profile, 2014).
The Corporate, Business and Functional Objectives are indeed consistent with one and another.
This is because they build off of each other as well as the mission. They address each part of the
mission of the Company. These objectives are focused towards the Company and its benefits as
well as the community and the customers’ benefits.
Strategic Posture
Our product portfolio strategy has three priorities:
1. Developing our portfolio - introducing new products to offer greater choice, ensuring products
of the highest quality, accelerating the growth of no- and low- calorie products, using more
natural ingredients where possible and providing package sizes to suit every occasion.
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2. Providing clear, informative nutritional labeling to educate consumers about the ingredients
and calories in our products.
3. Ensuring that our products are sold and marketed in a responsible way - engaging with parents,
nutritionists and educators to ensure the right portfolio of school beverages. We will provide a
wide variety of quality, refreshing beverages with nutritional and ingredient information so
consumers can make informed beverage choices.
The mission, objectives, strategies and policies are all clearly stated on the Coca-Cola Website.
This is important for consumer-corporation relationship because everything the company strives
for is explicitly stated, making it easier for the consumers to see what they stand for.
Corporate Strategy
Ø Directional
Coca-Cola employs a growth corporate strategy. Because Coca-Cola is a multi-national company,
Coke, as a brand, has multiple corporate strategies. The blanketing corporate strategy is that of
“The Coca-Cola Company” which entails the brands current global directional strategy. Beneath
that are its national and regional strategies, such as that of Coca-Cola Refreshments (formerly
Coca-Cola Enterprises), which charts the brand’s North American strategy. At this time, Coca-
Cola’s global corporate strategy revolves around its “2020 Vision” which set goals that Coca-
Cola wishes to meet or exceed by the year 2020. At this time, Coca-Cola is focusing on 6 P’s:
Profit, People, Portfolio, Partners, Planet, and Productivity. In addition “Coca-Cola’s Strategy is
to utilize its brands, distribution system, and financial strength to achieve long-term sustainable
growth.” (Kwon, 2008, pg. 29)
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Profit: Coca-Cola wishes to double its revenue by 2020 by creating economies of scale,
increasing investments, and cutting production costs without sacrificing product quality.
People: Coca-Cola seeks to create a better, improved workplace. By 2020, they want to employ
a significantly larger amount of women and increase diversity. Coke also wants to make its
workers more knowledgeable about the brand and become ambassadors for Coke. In addition,
Coke wants to ramp up its marketing efforts and perpetuate Coca-Cola’s dominance in the
beverage market by attracting the next generation of consumers.
Portfolio: Coke aims to increase the value of their portfolio by acquiring brands, catering to the
tastes of customers, pushing innovation, continuing to ensure the upstanding quality of Coke
products, and working closely with Coke’s bottlers.
Partners: Ensure that both The Coca-Cola Company and its individual bottlers are on the same
page regarding corporate goals and strategies. Cater to differences in regional and cultural tastes
and satisfy those demands.
Planet: Coke seeks to give itself a competitive edge through environmental responsibility by
using only sustainable water sources and by reducing climate change by changing packaging
operations.
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Productivity: Coca-Cola wants to increase productivity by increasing efficiency and decreasing
waste. To do this, Coke wants to streamline production and support processes. Coke also wants
to decrease its production costs to create a competitive cost advantage. (The Coca-Cola
Company)
Ø Portfolio Analysis
Coca-Cola is a privately owned company and uses three categories to define their product
portfolio (The Coca-Cola Company Reports, 2014). The three categories of Coca-Cola is the
concentrate, sparkling beverages, and still beverages (The Coca-Cola Company Reports, 2014).
Coca-Cola does not release sales or profits for each category or even each beverage. Coca-Cola
beverage was introduced in 1885, and the company did not expand into other products until the
1960’s (The Chronicle of Coca-Cola, 2013). In 1960 Fanta was introduced in Germany, Sprite
in 1961, and TAB in 1963 (The Chronicle of Coca-Cola, 2013). In 1960 Coca-Cola merged with
Minute Maid (The Chronicle of Coca-Cola, 2013). Coca-Cola sells hundred of different
beverages around the world, and even change the recipe to taste preferences of different regions
it is selling in.
Concentrate is made and sent to all the bottling companies for soda formulas. Coca-Cola does
not report sales of the soda concentrate, nor any information on them. Coca-Cola defines
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sparkling beverages as beverages with carbonation, energy drinks, carbonated water, as well as
flavored waters. Coca-Cola’s biggest seller is Coca-Cola itself and is ranked as the highest
selling sparkling beverage worldwide (Coca-Cola product description, 2013). Some other of
Coca-Cola’s sparkling beverages include: Fanta, Sprite, Diet and Light versions of Coca-Cola,
and vitamin water. Sparkling beverages fell by 1% this last quarter (Forbes, 2014). Coca-Cola
is the number one provider in the world of sparkling beverages. The public’s trend away from
sparkling beverages has hurt all companies who sell the beverages.
Coca-Cola still beverages are defined as nonalcoholic without carbonation including
noncarbonated water, flavor/enhanced water, juice and juice drinks, teas, coffees, sports drinks,
and noncarbonated energy drinks. Still beverages include Dasani, Minute Maid, PowerAde,
Honest Tea, and Fuse Tea. Healthier beverages are on the rise for Coca-Cola including their
Tea’s by 4%. Minute Maid just recently rose to the top selling juice drink in America (Forbes,
2014). Still beverages rose 8% this last year helping to offset the loss for sparkling beverages
(Forbes, 2014).
24. Page | 23
Coca-Cola sells thousands of different drinks around the globe. The BCG Growth-Share Matrix
provided is based upon American products and preferences.
Question Marks are defined as new products with the potential for success, but they need a lot
of cash for development (Wheelen, 2012). Coca-Cola’s question marks would be energy drinks
such as NOS and Burn to outrank popular Monster and Red bull drinks that take up the brand
market.
Stars are market leaders that are typically at the peak of their product life cycle and are able to
generate enough cash to maintain their high share of the market and usually contribute to the
company’s profits (Wheelen and Hunger, 2012). Coca-Cola’s top ranking drinks despite the
growing change in consumer preference is Coca-Cola, Sprite, Diet Coke, and Fanta. Due to
25. Page | 24
consumer preferences changing, Coca-Cola tea brands, waters, and fruit juices have been getting
larger volume sales.
Cash Cows bring in far more money than is needed to maintain their market share (Wheelen and
Hunger, 2012). Coca-Cola’s cash cows are its water brands due to the acceptable high markup
price.
Dogs have low market share and do not have the potential to bring in much cash (Wheelen and
Hunger, 2012). Dogs are Tab, Hi-C, and copycat sodas from other companies. These copycat
sodas include Pibb Xtra, Mellow Yellow, and Fresca.
Ø Parenting Strategy
The core operation of the Coca-Cola consists of the secret concentrate and syrup production.
Since the Coca-Cola is well known as the world’s most recognizable and iconic brand of
carbonated beverage, the Coca-Cola implements the corporate parent as its business strategy due
to the large demand around the globe. The Coca-Cola FEMSA is the biggest franchise bottler of
the Coca-Cola beverages, which has major operations in the South America Continent. (Coca-
Cola FEMSA, 2014) Though Coca-Cola owns the biggest market share of beverage drinks, the
invasion of Pepsi-Cola has been battling with Coca-Cola to compete with the gain of market
share. Thus, The relationship is critical for the Coca-Cola and its bottler company Coca-Cola
FEMSA. The Coca-Cola FEMSA joints with Coca-Cola to develop more sophisticated business
models and has consistent with the company’s competitive strategy in order to making effective
advertising and marketing plan to extend product line. Moreover, as a parenting company, the
26. Page | 25
Coca-Cola FEMSA has a shared value with the Coca-Cola, that is, seeking for growth
opportunities especially in the South America Continent. As a result, the major objective of a
corporate parenting of Coca-Cola is to expand the beverage portfolio by product innovation and
business acquisition overall. (Coca-Cola FEMSA, 2014)
Competitive Strategy
The Coca-Cola Company (Coca-Cola or the Company) implements differentiation competitive
strategy company in reference to its brand strategy. It is seen through the corporation’s
competitive advantage being our strong brand portfolio. Coca-Cola has done one thing and done
it well. It has produced a classic carbonated beverage that has allowed it to obtain loyal
consumers due to the heritage the company represents. Coca-Cola has combined its marketing
and manufacturing efforts in order for it to have the ability to modify any of its products due to
changes in the markets or volume demand. In order to maintain distinguishable with the identity
of their brand products Coca-Cola has invested into their packaging, distribution and advertising
sectors. Coca-Cola does indeed provide the same product to in all the world markets, and even
though top management doesn't allow consumer’s taste and preferences alter the taste of the
product they do let local market forced influence not only credit terms but also distribution and
promotional policies. In addition we have stated that Coca-Cola has a strong brand strategy.
Coca-Cola is a prime example of a successful company that possesses a strong manufacturer
brand. Coca-Cola has time over time demonstrated its ability within the global markets. It has
been successful by being able to think globally and act locally. It has been able to implement
sales promotion, distribution and customer service at a local level. In addition it has become a
billion dollar brand within six markets outside of the United States including Brazil, Germany,
Great Britain, Japan, Mexico, and Spain allowing the Company to enjoy a strong brand equity
27. Page | 26
over many decades. (Fu-Ling, 2009, Pg. 131) Because of Coca-Cola’s strong brand equity it is
able to enjoy a high level of consumer brand awareness and loyalty. Which gives Coca-Cola the
opportunity to extend its existing product lines.
Cooperative Business Strategy
During its lifetime, The Coca-Cola Company has made many different partnerships with
different companies. All collaborations have been done with different intentions: to benefit the
community, to help another company, or simply for greater good of Coca-Cola. Recently, Coca-
Cola joined alliance with InterContinental Hotels Group. They are known as the world’s leading
hotel company who is currently looking to better their customers stay. The ultimate goal for
InterContinental Hotels Group is to make their hotel brands customers preferred choice for guest
and hotel owners. Both companies, Coca-Cola and InterContinental Hotels Group, have a strong
portfolio “of favorite consumer brands that are instantly recognized and preferred around the
world”. The agreement between these two companies provides consistent beverage brand
experience to all of 3,200 hotels across the country.
Bruce McDonald, Vice President of Coca-Cola, comments on this agreement by stating, “this
enhanced relationship shows the strength of two Atlanta-based companies coming together to
create an experience that brings the enjoyment of the Coca-Cola brands to IHG’s guests at more
than 3,200 hotels across the country … We look forward to leveraging our join sustainability
activities and marketing programs to inspire and refresh our guests through unique, value-added
programs”.
28. Page | 27
Functional Strategy
Ø Marketing Strategy
Coca-Cola has an integrating marketing communication strategy. It integrates and coordinates
many of its communication channels. For example its mass media advertising, personal selling,
sales promotion, public relations and direct marketing strategy are all integrated in order to
deliver “a clear, consistent and compelling message about their brands and its products.” (Fu-
Ling, 2009, Pg. 131) In addition thanks to the integrated strategy they use they are able to
“produce better communications consistency and greater sales impact.” (Fu-Ling, 2009, Pg. 131)
Coca-Cola’s marketing techniques have been very effective in attracting and engaging current
and new consumers. Some of their marketing techniques have come through innovative vending
machines. The company has called their objectives to be dispensing both their products and
dispensing happiness. The company has used technology and out of the box creativity to allow
their consumers to interact with their consumers. The following are examples of how they have
dispensed happiness.
In 2010 within a New York college campus a Coca-Cola vending machine gave out “doses” of
happiness. It dispensed a several products from fresh flowers to pizza. Within South Korea a
Coca-Cola vending machine required individuals to copy dance moves from the band 2PM, the
more moves they got correct the more beverages they dispensed. At the National University of
Singapore a vending machine was programmed to dispense a Coke when someone gave the
actual vending machine a hug. On Valentines Day in 2012 a vending machine in Istanbul,
Turkey gave couples that kissed or hugged free Coca-Cola drinks. Furthermore, within another
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college campus a vending machine forced students to have to work with someone else in order to
take the lids of their bottle drinks.
Ø Operations and Logistics Strategy
Instead of owning its operations in terms of bottling, Coca-Cola has chosen to form
arrangements or acquiring stakes in bottler companies around the world in order to deliver the
mass volume of products that is demanded of them. Because of its global brand and its secret
formula for its carbonated beverages it has been able to establish “profit power, and points of
leverage.” (De Kuijper, 2010, Pg. 2) Coca-Cola and its bottler’s partnership result in mutual
benefits. Coca-Cola supplies its bottlers with its syrup and gives them rights to their world-
famous name in exchange for it “the bottlers buy the filling equipment and enormous quantities
of glass and plastic bottles, manage workers ranging from plant employees to truck drivers,
negotiate with unions, develop relationships with retailers, and handle local government.” (De
Kuijper, 2010, Pg. 2) As a result the bottlers take on the largest percentage of risk and capital
expenditure but with Coca-Cola’s returns on invested capital they produce a multiple of the
bottlers’ returns.
Coca-Cola has continued to increase in its variety of products. Because of the different selling
methods of Coca-Cola products such as stores and vending machines, Coca-Cola has segmented
their consumers to better cater to consumer preferences. They have been able to determine what
product sells more and during what time does the next shipment needs to be delivered. In
addition the drivers of certain countries go beyond their traditional roles. Take for example in
Japan many of the drivers help supermarkets by stocking Coca-Cola products on the shelves,
30. Page | 29
setting them up in an attractive fashion and even setting up displays to advertise the products.
(Fuller, 1993, Pg. 87)
Coca-Cola sells its concentrates and syrups to their bottling partners. They then are responsible
for manufacture and packaging the finished products, which are then sold to distributors and
other customers. Within foreign markets Coca-Cola sells its concentrates for its fountain
beverages to bottling partners who are authorized to manufacture their products. (Annual Report,
2014, Pg. 5)
The five largest independent bottling partners that Coca-Cola works in conjunction with includes:
(Annual Report, 2014, Pg. 5)
• Coca-Cola FEMSA: which has bottling and distribution operations in a substantial part of
central Mexico, Brazil, Guatemala, most of Colombia; all of Costa Rica, Nicaragua, Panama and
Venezuela, Argentina and all of the Philippines.
• Coca-Cola HBC AG: which has bottling and distribution operations in Armenia, Austria,
Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, the Czech Republic, Estonia, the
Former Yugoslav Republic of Macedonia, Greece, Hungary, Italy, Latvia, Lithuania, Moldova,
Montenegro, Nigeria, Northern Ireland, Poland, Republic of Ireland, Romania, Russia, Serbia,
Slovakia, Slovenia, Switzerland and Ukraine
• Arca Continental, S.A.B. de C.V.: which has bottling and distribution operations in northern
and western Mexico, Ecuador and northern Argentina.
• New CCE: which has bottling and distribution operations in Belgium, continental France,
Great Britain, Luxembourg, Monaco, the Netherlands, Norway and Sweden; and
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• Swire Beverages: which has bottling and distribution operations in Hong Kong, Taiwan, seven
provinces in mainland China and territories in 11 states in the western United States.
Ø Corporate Sustainability Strategy
“Coca-Cola sees its sustainability efforts first and foremost as the right thing to do, a
continuation of responsible corporate citizenship that began 125 years ago.” (Madhavan, 2012,
Pg. 94) Coca-Cola is present in more than 200 countries and in thousand of communities which
gives them the opportunity to make a real difference in communities. Corporate Social
Responsibility (CSR) as a result is embedded within the pillars needed to reach Coca-Cola’s
2020 Vision. The pillars being the 6 P’s, CSR being seen through Planet component. Coca-
Cola’s corporate sustainability strategy as a result includes various elements including: Beverage
Benefits, Active healthy living programs, Energy efficiency and climate protection, sustainability
packaging, water stewardship, and workplace rights. Water Stewardship is one of the biggest
focuses. Coca-Cola wants to be able to safely return to nature and equivalent volume of Water
that has been used in their beverages.
Policies
Workplace Rights Policy
This policy closely parallels the International Human Rights Standards. It includes the following
components: freedom of unionization, prohibition of forced labor, prohibition of child labor,
prohibition of discrimination, establishment of safe working conditions, workplace security
(intolerance of violence and harassment), "fostering of goodwill in communities" through
recognition of environmental impact.
32. Page | 31
Supplier Guiding Principles
Similar to the Workplace Rights Policy but tailored to suppliers through addition of components.
Coca-Cola wants to extend its values onto its suppliers as they explicitly address to them their
belief that “shared values must serve as the foundation for relationships between the Coca-Cola
Company and its suppliers.” The added components specific to suppliers are business integrity
and management systems. Business integrity details how suppliers must uphold the highest
integrity through avoidance of fraudulent activities and any other unethical behavior.
Additionally, management systems state how suppliers must implement systems to ensure lawful
compliance within their employees.
Global Mutual Respect Policy
The global mutual respect policy lays out employee guidelines for communications in work
operations. It explicitly states the values of "diversity and inclusion" as core factors within the
business. It notifies employees of their responsibility to maintain a safe environment while
reporting any witnessed deviance to the policy with the statement that “It is every employee’s
responsibility to maintain a work environment that reflects mutual respect and is free from all
discrimination and harassment.”
Alignment
Coca-Cola’s current outreach of its distribution network and brand image into international
markets has been for the most part a successful and triumphant venture of marketing,
philanthropy, and distribution sustainability. The Coca-Cola brand sets its mission and goals with
everyone individual in the world, the company’s transparency and values clearly reflect a
company that has the potential to sustain a successful worldwide brand for years to come. A
33. Page | 32
clear representation of Coca-Cola’s traditional values was in their 2014 Super Bowl commercial,
which included individuals of nations all around the world singing the “America The Beautiful”
song. Although, this commercial is a clear indicator of Coca-Cola’s mission and values, the
question is to what extent do international consumers feel that they have a passion for the brand
and its values.
This is where Coca-Cola’s objectives and goals toward attracting new market segments comes
into play. Coca-Cola has a 2020 vision which includes profit, people, portfolio, partners, planet,
and productivity. This is an overall strive to perform and grow at a greater level than ever before
for each of these segments.
The Spanish carbonated market has experienced overall decline, in both value and volume in
2012. This however, is expected to recover and grow at a slow rate over the forecast period to
2016. Coca-Cola is the leading player in the Spanish and European soft drinks market.
Consumers in this market are likely to be strongly influenced by the Coca-Cola brand because it
is mainly a tourist market, and this weakens buyer power, as retailers are forced to stock popular
brands with consumers.
One of Coca-Cola’s strategies is to sustain a tourist market in popular international markets by
distributing its products to retailers. Coca-Cola has successfully been able to align this strategy in
international markets because competitors do not have as much investment in tourist markets and
Coca-Cola is able to increase revenues simply by distributing in popular markets.
34. Page | 33
CORPORATE GOVERNANCE
Board of Directors
Muhtar Kent
Chairman of the Board and CEO of The Coca-Cola Company |
B.S. from University of Hull | M.S. from City University,
London | Joined Coca-Cola in 1978
In 1985, Kent was made General Manager of Coca-Cola Turkey
and Central Asia. Additionally he served as President of the East
Central Europe Division and Senior Vice President of Coca-Cola
International. He was the President and Chief Operating Officer at
from 2006 to 2008. In 2009 he became the Chairman of the Board Chief Executive officer since
2008. Furthermore Kent is active in the global community. He is also a co-chair of the Consumer
Goods Forum, a fellow of the Foreign Policy Association, and a member of the Business
35. Page | 34
Roundtable. Mr. Kent also serves on the boards of Special Olympics International, Ronald
McDonalds House Charities, Catalyst and Emory University.
Herbert A Allen
Director of Coca Cola Company/ President and Chief
Executive Officer of Allen & Company Incorporated
External Member
Mr. Allen graduated from Williams College in 1962 and
immediately joined Allen and Company. He has been a Director at
Coca-Cola since 1982. He serves as the President, Chief Executive
Officer and a Director at Allen & Company, a privately held investment firm. He was a Director
at Convera Corporation from 2000 to 2010.
Ronald W. Allen
Director of the Coca Cola Company | Chairmen of the Board |
President Chief Executive Officer of Aarons Inc. |
External Member
Ronald W. Allen earned his bachelor’s degree in 1964 at the
Georgia Institute of Technology. Mr. Allen has been a Director of
The Coca-Cola Company since 1991. He retired as the Chairman
of the Board, President and Chief Executive Officer of Delta Air Lines in July 1997. From July
1997 through July 2005, Mr. Allen was a consultant to and Advisory Director of Delta. In
November 2012, Mr. Allen was appointed Chairman of the Board of Aaron’s, Inc., where he has
served as a Director since 1997. Mr. Allen served as President and Chief Executive Officer of
Aaron’s, Inc. since February 2012 and as interim President and Chief Executive Officer of
Aaron’s, Inc. from November 2011 until February 2012. He previously served as a Director of
36. Page | 35
Interstate Hotels & Resorts, Inc. from 2006 to 2010, Forward Air Corporation from 2011 to 2013
and Guided Therapeutics Inc. from 2008 to January 31, 2014. He is also a Director of Aircastle
Limited.
Ana Botin
Director of the Coca Cola Company | Chief Executive Officer
and Director of Santander UK PLC | External Member
Ms. Botín has been a director of The Coca-Cola Company since
July 18, 2013. She received her bachelors degree from Bryn
Mawr College in 1981 and continued her education at Harvard
Business School focusing on banking and finance. She started her
career with JP Morgan in New York in 1981 and continuously
moved up. In 1988 she joined Banco Santander, S.A., a global, multinational bank, where she
established and led its international corporate banking business in Latin America in the 1990’s
where she is now a leading financial services provider and Chief Executive Officer and Director
of Santander UK since 2010. Ms. Botín served as Executive Chairman of Banco Español de
Crédito, S.A., also a subsidiary of Banco Santander, S.A., from 2002 to 2010. She previously
served as a director of Assicurazioni Generali S.p.A., a global insurance company based in Italy,
from 2004 to 2011. She is a Director of Banco Santander, S.A.
Howard G. Buffett
Director of Coca Cola Company | President of Buffett
Farms and Howard G. Buffett Foundation | External
Howard G. Buffett has been a Director of The Coca-Cola
Company since 2010. Along with working with Coca-Cola, Mr.
Buffett is President of Buffett Farms where he has held this
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position since 1986 Corporations well as serving on the Corporate Boards of Berkshire
Hathaway, Inc., working with Lindsay Corporation, and Sloan Implement. Mr. Buffett is
Chairman and Chief Executive Officer of the Howard G. Buffett Foundation, a charitable
foundation that supports initiatives focused on food and water security, conservation and conflict
management, and has held these positions since December 2013. He previously served as
President of the Howard G. Buffett Foundation from 1999 to December 2013. Mr. Buffett travels
different countries in hopes of overcoming the challenges to preserve our biodiversity and meet
the needs of our growing global population. Howard G. Buffett bring a lot to the table and has
served on numerous boards as well as numerous non-profit boards.
Richard M. Daley
Director of The Coca Cola Company | Managing Principal of
Turk Partners LLC | External Member
Richard M. Daley has been a Director of The Coca-Cola Company
since 2011. Mr. Daley served as Mayor of Chicago for six terms
from 1989 to 2011. Daley received his bachelors degree from
Providence College in Rhode Island and earned a Juris Doctors
degree from DePaul University. Along with being a Director of Coca-Cola, Daley is the Mr.
Daley is the Executive Chairman of Tur Partners LLC since 2011. This position helps him bring
background knowledge in an investment and advisory firm focusing on sustainable solutions
within the urban environment. He is also an Of Counsel at Katten Muchin Rosenman LLP since
June 2011. In October 2011, he was appointed a senior advisor to JPMorgan Chase & Co., where
he chairs the “Global Cities Initiative,” a joint project of JPMorgan Chase & Co. and the
Brookings Institution to help cities identify and leverage their greatest economic development
38. Page | 37
resources. Mr. Daley also has been a distinguished senior fellow at the University of Chicago
Harris School of Public Policy since May 2011. He is also a Director of Diamond Resorts
International, Inc. Mr. Daley’s background, skills, and connections make him an important
member of the board.
Barry Diller
Director of The Coca Cola Company | Chairmen of the
Board and Senior Executive IAC/Inter Active Corp
Expedia, Inc. | External Member
Barry Diller has been a Director of The Coca-Cola
Company since 2002. Although one may not think from
dropping out of UCLA after one semester that Mr. Diller
would become such a successful man, he is also Chairman of the Board and Senior Executive of
IAC/InterActiveCorp. Mr. Diller held the positions of Chairman of the Board and Chief
Executive Officer of IAC/InterActiveCorp and its predecessors since August 1995 and ceased
serving as Chief Executive Officer in December 2010. Mr. Diller is also Chairman of the Board
and Senior Executive of Expedia, Inc. Mr. Diller has served as Special Advisor to TripAdvisor,
Inc., an online travel company, since April 2013 and served as its Chairman of the Board and
Senior Executive from December 2011, when it was spun off from Expedia, Inc., until December
2012, and was a member of its Board until April 2013. Mr. Diller served as the non-executive
Chairman of the Board of Ticketmaster Entertainment, Inc. from 2008 to 2010, when it merged
with Live Nation, Inc. to form Live Nation Entertainment, Inc. Mr. Diller served as the non-
executive Chairman of the Board of Live Nation Entertainment, Inc. from January 2010 to
October 2010 and was a member of its Board until January 2011. Mr. Diller also is a Director of
Graham Holdings Company (formerly The Washington Post Company). MR. Diller is a media
39. Page | 38
executive and helps the Coca-Cola Company with search, applications, media, ecommerce, and
more.
Helene D. Gayle
Chairman on The Coca Cola Company | President and Chief
Executive Officer CARE USA | External Member
Dr. Gayle has been a director of The Coca-Cola Company since
April 24, 2013. Dr. Gayle, M.D. and M.P.H., has been President
and Chief Executive Officer of CARE USA since 2006. CARE is
a humanitarian aid organization that helps fight global poverty.
Before CARE Gayle served as program director in the Global
Health Program at the Bill & Melinda Gates Foundation and the Center for Disease Control and
Prevention focusing on HIV/AIDS where she was for 20 years. She is also a Director of Colgate-
Palmolive Company. She received her B.A. from Barnard College, M.D. from the University of
Pennsylvania, and her M.P.H. from John Hopkins University.
Evan G. Greenberg
Director of The Coca Cola Company | Chairman and
President and Chief Executive Officer ACE Limited |
External Member
Evan G. Greenberg has been a Director of The Coca-Cola
Company since 2011. Mr. Greenberg is the Chairman and Chief
Executive Officer of ACE Limited, and served as President and
Chief Operating Officer of ACE Limited from June 2003 to May
2004, when he was elected to the position of President and Chief Executive Officer Prior to
40. Page | 39
joining the ACE Group in 2001, Mr. Greenberg held a number of senior management positions
at American International Group, Inc., most recently serving as President and Chief Operating
Officer from 1997 until 2000. Over the years, Mr. Greenberg has worked in the insurance
industry and has had numerous amounts of underwriting and management positions, gaining him
significant insight in the global property, casualty and life insurance sectors.
Alexis M. Herman
Director of The Coca Cola Company | Chair and Chief
Executive Officer New Ventures, LLC | External Member
Alexis Herman has been a Director of The Coca-Cola
Company since 2007. She received her education from Xavier
University of Louisiana, Spring Hill College, and Edgewood
College. She has been secretary of labor and has served under President Bill Clinton. Ms.
Herman is the Chair and Chief Executive Officer of New Ventures LLC, a corporate consulting
company, and has held these positions since 2001. She served as Chair of the Business Advisory
Board of Sodexo, Inc., an integrated food and facilities management services company, through
2013 and serves as a member of Toyota Motor Corporation's Global Advisory Board. As chair of
the Company's Human Resources Task Force from 2001 to 2006, Ms. Herman worked with the
Company to identify ways to improve its human resources policies and practices following the
November 2000 settlement of an employment lawsuit. She is also a Director of Cummins Inc.,
Entergy Corporation and MGM Resorts International. From working with the White house as
Director of Labor Department’s Women's Bureau, to Secretary of Labor between the years of
1997-2001, she now also serves on the Board of Coca-Cola as the Human Resources task force.
41. Page | 40
Robert A. Kotick
Director of The Coca-Cola Company | President, Chief
Executive Officer and Director of Activision Blizzard, Inc. |
External Member
Robert A. Kotick has been a Director of The Coca-Cola Company
since 2012. Mr. Kotick is President, Chief Executive Officer and a
Director of Activision Blizzard, Inc., an interactive entertainment
software company, and has held these positions since 2008. He attended the University of
Michigan and began his entrepreneurial career there working on software for Apple II. Mr.
Kotick served as Chairman and Chief Executive Officer of the predecessor to Activision
Blizzard, Inc. but later ended up having controversy. As of 2008, he is no longer Chief Executive
Officer.
Maria Elena Lagomasino
Director of The Coca-Cola Company | Chief Executive
Officer and Managing Partner of WE Family Offices |
External Member
In 2008 The Coca-Cola Company welcomed Maria Elena
Lagomasino to be a Director on their board. She received her
M.B.A. from Fordham University. She began her career with
Citibank as vice president then moved to Chase in 1993. Ms.
Lagomasino has also been the Chief Executive Officer and Managing Partner of WE Family
Offices since March 2013. Ms. Lagomasino served as Chief Executive Officer of GenSpring
Family Offices, LLC, an affiliate of SunTrust Banks, Inc., from November 2005 through October
2012. From 2001 to 2005, Ms. Lagomasino has been Chairman, CEO, and Director of multiple
42. Page | 41
companies, including JPMorgan Private bank, a part of JPMorgan Chase&Co, the Chase
Manhattan Bank and Avon Products, Inc. She has held positions and worked with global
financial services, management, and other various positions in private banks. Her skills and
various positions help her serve as an effective member on the Coca-Cola board.
Sam Nunn
Director of The Coca Cola Company | Co-Chairman and
Chief Executive Officer of Nuclear Threat Initiative (NTI) |
External Member
In 1997 Sam Nunn became a Director of the Coca Cola
Company. He received his law degree from Emory University
School of Law. In 1972 Mr. Nunn started serving as a member
of the United States Senate and was a part of the senate through 1996. In 1999 he began serving
as Chairman of the Board of the Center for Strategic & International Studies. Along with being a
lawyer and a politician, Mr. Nunn has been Co-Chairman and Chief Executive Officer of the
Nuclear Threat Initiative since 2001. His global concern shows in that The Nuclear Threat
Initiative is a nonprofit organization working to reduce the global threats from nuclear, biological
and chemical weapons. Mr. Nunn also has credentials on national defense. He previously served
as a Director of Chevron Corporation from 1997 to 2011, Dell Inc. from 1999 to 2011 where he
served as Lead Director, General Electric Company from 1997 to April 2013 and Hess
Corporation from 2012 to May 2013.
43. Page | 42
James D. Robinson III
Director of The Coca Cola Company | Co-Founder and
General Partner of RRE Ventures | President of JD Robinson,
Inc. | External Member
James D. Robinson III has been a Director of The Coca-Cola
Company since 1975. In 1957 he graduated from Georgia Tech’s
School of Industrial Management. He has been Co-Founder and
General Partner of RRE Ventures since 1994. He is also President of J.D. Robinson, Inc., a
strategic advisory firm. He served as non-executive Chairman of the Board of Bristol-Myers
Squibb Company from 2005 to 2008 and as Chairman and Chief Executive Officer of American
Express Company from 1977 to 1993. He previously served as a Director of Novell, Inc. from
2001 to 2009. He has background knowledge in advisory and investment firms that have helped
him benefit the Coca-Cola Company.
Peter V. Ueberroth
Director of The Coca Cola Company | Investor and
Chairman of Contrarian Group Inc. | Non Executive Co-
Chairman of Pebble Beach Company | External Member
Peter V. Ueberroth has been a Director of The Coca-Cola
Company since 1986. Along with being an investor of the
Contrarian Group, Mr. Ueberroth is also the chairman. He has
been the chairman of the Contrarian Group since 1989. This company is in the business of
managing other businesses Mr. Ueberroth also serves as the chairman of the board of Aircastle
Limited and he is also the none-executive co-chairman of Pebble Beach Company. He is also a
Director of Aircastle Limited.
44. Page | 43
*See Appendix 1; Table 1 For Stock owned by each Director
The Coca-Cola Company has an elite staff that is highly skilled, has a lot of background
knowledge and their connections internationally and domestically help the company succeed.
Coca-Cola as a whole, as well as their board members individually are concerned with
environmental sustainability as discussed in depth throughout the report.
The Coca-Cola Company has a commitment to good corporate governance that “promotes the
long-term interests of shareowners, strengthens Board and management accountability and helps
build public trust in the Company.” (Coca-Cola Company, 2014) Coca-Cola’s Board of Directors
(BOD) are directly elected by the company’s shareowners in order to protect their interests as
well as the long term health and financial success of the company. Coca-Cola’s BOD serves as
the ultimate decision making body of the Company. (Investors, 2014) The Board of Directors are
actively involved within the Company including strategic management decisions, including top
management proposals. They not only monitor what is going on within the company, but they
also evaluate any proposal made and place influence on beneficial proposals. In addition they
initiate and suggest proposals that would allow the company and those impacted by its decisions
to benefit from. They additional determine the final approval of decisions. Coca-Cola’s BOD
provide advice and counsel to the CEO as well as other senior officers. They additional monitor
decisions to ensure that they do not harm the assets of the company and comply with the
financial and internal controls of the company. (Investors, 2014) Because one of their pillars to
achieve their 2020 Vision involves environmental sustainability all their actions and approvals
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are fueled with either supporting environmental sustainability or at least not negatively impact
upon the environment.
_____________________________________________________________
Top Management - Senior Functional Leadership
The following members of Coca-Cola’s senior management team are responsible for the
company's high performance in areas such as sustainability, global branding, and award-winning
marketing campaigns. All members of top management have held their current positions for
three or more years. Most managers were promoted internally after several years experience with
the Coca-Cola Company.
Alexander B. Cummings
Executive Vice President and Chief Administrative Officer |
Joined the company in 1997 managing Coca-Cola's North &
West Africa Division | Previous Vice President of Finance for
The Pillsbury Company
Alexander B. Cummings was born in Liberia, West Africa and
joined Coca Cola in 1997 as Region Manager, Nigeria. In 2000,
he was named President of the Company’s North and West Africa
Division, In March 2001, he became President and Chief Operating Officer of the Africa Group.
Prior to joining the Company, Mr. Cummings held several positions with The Pillsbury
Company in the U.S. Cummings has a B.S> degree in Finance and Economics from Northern
Illinois University and an MBA in Finance from Atlanta University.
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J. Alexander (Sandy) M. Douglas, Jr.
Senior Vice President, Global Chief Customer Officer |
President, Coca-Cola North America | Joined company in
1988 as a District Sales Manager this will be his 14th year
serving as President of North America Retail Division
(promoted internally)
J. Alexander M. Douglas Jr. (Sandy) is Senior Vice President and
Global Chief Customer Officer of The Coca-Cola Company, as
well as President of Coca-Cola North America. Sandy joined The
Coca-Cola Company in January 1988 as a District Sales Manager for the Foodservice Division
of Coca-Cola USA. He also held a variety of positions with increasing responsibility in Coca-
Cola USA. He was named Vice President of Coca-Cola USA in 1994, assuming leadership of the
CCE Sales & Marketing Group. In 1998, his responsibilities were increased to include the entire
North American Field Sales & Marketing Groups. He was appointed President of the North
America Retail Division in 2000. After graduating from the University of Virginia in 1983,
Sandy began his career at The Procter & Gamble Company working in a variety of sales and
sales management positions
Bernhard Goepelt
Senior Vice President and General Counsel | Joined company
in 1992 as Legal Counsel for the German Division| Promoted
internally to current position in 2011
Bernard Goepelt is Senior Vice President, General Counsel and
Chief Legal Counsel of The Coca-Cola Company. Mr. Goepelt
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joined The Coca-Cola Company in March 1992 as Legal Counsel for the German Division,
based in Essen, Germany and was promoted to Deputy Division Counsel in 1995.In January
1997, Mr. Goepelt was appointed Legal Counsel for the Middle and Far East Group. He moved
to Thailand in November 1998 and was promoted to Division Counsel, Southeast and West Asia
Division in 1999. In January 2003, Mr. Goepelt was appointed Group Counsel for the Central
Europe, Eurasia and Middle East Group, based in Vienna. In October 2004, Mr. Goepelt was
appointed Group Counsel for Japan, South Pacific and Korea, based in Tokyo. In June 2005, he
assumed the position of General Counsel, Japan and China. Mr. Goepelt moved to Hong Kong in
March 2007 to assume the role of General Counsel, Pacific Group. In April 2010, Mr. Goepelt
moved to Atlanta to become Associate General Counsel, Global Marketing, and Commercial
Leadership & Strategy. In September 2010, he took on the additional responsibility of General
Counsel for the Pacific Group. In addition to his functional responsibilities, Mr. Goepelt
managed the administration of the Legal Division. He was named to his current position in
December 2011. Following his legal studies and his clerkship at the civil court in Essen,
Germany, Mr. Goepelt received his German local bar admission in 1992. He finished his
doctoral programmer in 1994 with a thesis on freedom of speech and unfair competition.
Ceree Eberly
Chief People Officer | Senior Vice President | Joined company in
1990 | Promoted internally to current position in 2009 responsible
for employee development while creating great quality in the
workplace
Ceree Eberly was appointed to the role of Chief People Officer and
Senior Vice President for The Coca-Cola Company in 2009. She
joined the Company in 1990 and has since served in a variety of
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leadership roles. In 1998, Ceree became the Human Resources Director, Central America &
Caribbean Division in San José, Costa Rica, where she oversaw both Company and bottling
operations’ human resources strategies. In 2003, she was appointed Vice President, Corporate
Business Unit, where she led the support of the worldwide McDonald's business in technical
operations, quality assurance, social responsibility, communications, global juice portfolio, IT
and human resources. Ceree filled this role until 2007, when she became the Group Human
Resources Director for Europe.She has a Bachelor of Arts degree from the University of
Tennessee, graduating with high honors.
Clyde C. Tuggle
Senior Vice President, Chief Public Affairs and
Communications Officer | Joined the company in 1989 as
part of the Corporate Issues Communications department |
Promoted internally to his current position in 2009
Clyde C. Tuggle is Senior Vice President, Chief Public Affairs
and Communications Officer, The Coca-Cola Company.
Mr.Tuggle joined the Company in January 1989 in the Corporate
Issues Communications department. In June 1992, he was named Executive Assistant to Roberto
C. Goizueta, then Chairman and CEO of the Company, where he managed external affairs and
communications for the Office of the Chairman. In September 2008, Mr. Tuggle was named
Senior Vice President, Corporate Affairs and Productivity. In May 2009, he was named Senior
Vice President, Global Public Affairs and Communications, a position reporting directly to the
Chairman and CEO of The Coca-Cola Company. Mr. Tuggle holds a bachelor's degree in
German Studies and Economics from Hamilton College in New York and a Master of Divinity
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from Yale University. He studied at the Ludwig-Maximillian Universität in Munich, Germany,
and completed The Executive Program at the University of Virginia's Darden Business School.
Ed Steinike
Senior Vice President | Chief Information Officer | Joined the
company in 2002 as Chief Technology Officer | Steinike returned to
Coca-Cola in 2010 to serve in current position
Steinike “is responsible for the leadership of the Company’s
information technology strategy, services and operations.” (Coca-Cola
Company, 2014) Prior to working within Coca-Cola he worked at
General Electric where he was responsible for “manufacturing, service, engineering and IT.”
(Coca-Cola Company, 2014) He received his B.S. degree in Electrical Engineering from
Marquette University.
Kathy N. Waller
Executive Vice President; Chief Financial Officer | Joined
company in 1987 serving in the Accounting Research
Department
Waller is responsible for leading Coca-Cola’s global finance
organization as well as representing the company to investors,
lenders and rating agencies. “She oversees M&A, Investor
Relations, Tax, Treasury, Audit, Accounting and Controls,
Financial Reporting and Analysis, Real Estate and Risk Management.” (Coca-Cola Company,
2014) Additionally, Waller is involved within various women initiatives including the Women’s
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Leadership Council and the Women in Leadership Global Program. She received her Bachelor’s
and MBA degrees from the University of Rochester.
Guy Wollaert
Senior Vice President; Chief Technical and Innovation Officer
Guy Wollaert | Joined Coca-Cola in 1992
Wollaert has “held various positions of increasing responsibility in
the technical and supply chain fields.” (Annual Report, 2014) Fron
2003 to 2006 he was the President of Coca-Cola national Beverage
LTD. It serves as the national supply management company for
Japan’s supply business. After that he was made Vice President of Global Supply Chain
Development, and until December 2010, he served as General Manager, Global Juice Center. He
was then appointed Chief Technical Officer from January 2011 and was then elected Senior
Vice President of the Company as of February of 2011. (Annual Report, 2011)
Irial Finan
President, Bottling Investments Group | Joined company in 2004
appointed to his current position | Externally
Finan joined the Coca-Cola system in 1981 within Coca-Cola
Bottlers Ireland, Ltd. Within the company he has served various
accounting positions. Up until 1990, Finan served as the Finance
Director of Coca-Cola Bottlers Ireland, Ltd. Additionally, he was
Managing Director of Coca-Cola bottler in Romania and Bulgaria until late 1994. Finan also
served as the Managing Director of Molino Beverages. Within this position he had the
“responsibility for expanding markets, including the Republic of Ireland, Northern Ireland,
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Romania, Moldova, Russia and Nigeria.” (Annual Report, 2014) Furthermore, he was elected
Executive Vice President of Coca-Cola Hellenic in October of 2004 and is currently within this
position.
Javier C. Goizueta
President, McDonald’s Division, Vice President | Joined
company in 2001 | Internally Promoted
Goizueta is responsible for building the strategic alliance with
McDonald’s in over 31,000 restaurants and in over 100 countries.
(Coca-Cola Company, 2014) Prior to joining the Coca-Cola
Company “Mr. Goizueta spent 20 years with Procter & Gamble, 10
years in their U.S. Operations and 10 years in Latin America. He is Trilingual in Spanish,
English and Portuguese and received his Bachelor of Arts degree from Auburn University.”
(Coca-Cola Company, 2014)
Joseph V. Tripodi
Executive Vice President | Chief Marketing and Commercial
Officer
Mr. Tripodi joined the Company as the Chief Marketing and
Commercial Officer in September of 2007. He was then elected
Senior Vice President of the Company and served until July 2009.
Before he joined Coca-Cola Tripodi served as the Senior Vice
President and Chief Marketing Officer of Allstate Insurance Co. where he worked for four years.
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Lisa M. Borders
Vice President of Global Community Connections | Chair of The
Coca-Cola Foundation
Borders is responsible for the integration of the Company’s global
community outreach and philanthropic efforts within the company’s
sustainability agenda. Lisa has worked in her community primarily
focusing on family issues in the areas of education, healthcare and
housing. Borders holds a Bachelor’s Degree from Duke University (Durham, NC) and a Masters
of Science in Health Administration from the University of Colorado (Denver, CO). (Coca-Cola
Company, 2014)
Top management has indeed established a systematic approach to strategic management. This is
because in order to be a strategic management firm, the top management of a company must
form groups of managers and key employees at many levels, from various departments and work
groups and planning is typically interactive across levels and is no longer only top down. Most of
the managers from top management are actually employees of lower management that have been
promoted to higher positions over the time. This concept of promoting from within concept
where companies show support to their own employees instead of reaching out to hire someone
from the outside, which keeps their employees loyal and productive. Different managers of top
management are responsible for different sectors and tasks of the company. Under them, they
have their respective teams that help them complete the tasks that they have on hand.
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For The Coca Cola Company, top management, is very involved in the strategic management
process. Top management has focused on management quality as a key element of their growth
strategy and it remains committed to fostering the development of quality management at all
levels from top to bottom. Coca Cola has an increasing number of multinational executives from
their new and existing territories. This shows how the company is increasing diversity and trying
to involve every kind of people within it. Coca Cola is also transforming their commercial
models to focus on their customer’s value potential and using a value based segmentation
approach to capture the industry’s value potential. (Coca Cola Femsa, 2014)
Coca-Cola’s top management interacts quite well with both the boards of directors and lower-
level management. At the Coca-Cola there is an interactive structure in place that promotes
transparency and communication from within the firm. In fact, at any given point if a top
management member wants to discuss something with the board that can be easily and quickly
established. In addition, since Coca-Cola promotes from within most top management members
were at one point a lower-level manager. As a result, they understand its implications and how
important it is to incorporate their input.
Coca-Cola enforces a clear code of business conduct to clearly identify the ethics and
compliance program. The code of business conduct, also known as a code of ethics, is a
management tool for setting out an organization’s values, responsibilities, and ethical obligations.
The code of ethics is helpful provides guidance to employees when they are handling ethical
situations in business. Coca-Cola makes it a requirement for all employees to read and
understand their code of ethics and follow its rules in the workplace. This code of ethics is
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administered by Coca-Cola’s Ethics & Compliance Committee, which is responsible for
executing and overseeing ethics and compliance programs and determines code violations and
discipline. Coca-Cola ensures that their code of ethics is in a socially responsible manner by
regularly monitoring and auditing the business to ensure compliance with the code. Coca-Cola
also offers online training to its associates so that they can further understand and be more aware
of their code of ethics policy.
Coca-Cola’s strategic decisions are all made on top of social responsibility and sustainability of
the environment impact. Environmental sustainable manner enhances Coca-Cola’s goals and
vision. In the past few decades, Cola-Cola understands that the decisions on bottling operations
and distribution management are critical to maintaining the sustainability issue. Thus, Coca-
Cola’s value chain analysis clearly emphasizes the reduction of the environmental effect over
manufacturing production from suppliers, ingredients procurement, distribution management,
sales, and most importantly, recycling program. Coca-Cola developed its strategy decision
interlink with its procurement sustainability issues in order to provide a sustainability value over
its manufacturing process. Coca-Cola’s sustainability strategy decision had made a
comprehension of the environmental impact on its products and also had developed a
comprehensive sustainability trends for its future business.
Top executives at Coca Cola do own significant amounts of stock from the company. The Coca
Cola Company at its most recent board meeting voted on a new executive compensation plan and
passed. This new plan boosted the number of stock options for executive management by 20%.
Many shareholders for the company were against the plan but because less than 50% of them
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voted, including Warren Buffett, it passed. One third of the shareholders were worried about this
plan taking place for it takes away from the rest of the company’s shares.
Top management is sufficiently skilled to cope with likely future challenges. Every single one of
their top management personnel have years of experience. Alexander B. Cummings, who has
worked for The Coca-Cola Company for the past 13 years and is the Chief Administrative
Officer and Executive Vice President of the Coca-Cola Company, has served on various boards
and in various bottling partner companies. In fact, Cummings has a background in finance and
previously ran all of Coke’s operations in Africa, leading to major growth in Coke’s Africa
operations. Carla Olton, the Chief Quality and Product Integrity Officer, is another example of a
strong leader, having a background in hard science and experience working in retail companies
and Coke suppliers. The years of collective experience among Coke’s executive team afford top
management the ability to handle future challenges of the corporation. In addition, each of the
top management’s focus is on a different area that helps benefit the company’s 2020 Vision.
EXTERNAL ENVIRONMENT: OPPORTUNITIES AND TRHEATS (SWOT)
Natural Physical Environment: Sustainability Issues
The biggest threat Coca-Cola is currently dealing with is water shortages around the world. Since,
Water is the main ingredient in all of their products this is a massive problem. Rapid population
growth and continual pollution of accessible freshwater sources have created water scarcities
around the world. “As a result, Coca-Cola may incur increasing production costs or face capacity
constraints, which could affect its profitability in the long run.” (Market index, 31) (T)
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In order to remedy this situation Coca-Cola can look into expanding its product portfolio into
other products that don’t require huge amounts of fresh water and turn this threat into a
promising opportunity. Its basic finance, one should never put all our eggs into one basket. That
way one can diversify risk, especially when it is uncontrollable. This way if this water scarcity
problem continues Coca-Cola has a way to support itself in the meantime. (O)
Societal Environment
Economic
An economic force that is affecting the food and beverage industry is the cost per unit. There has
been a spike in the trend for healthy living, however many complain that the cost is unaffordable.
Therefore, although there has been a dramatic increase in the trend of living a healthy lifestyle,
there has also been a spike in obesity. “Consumers with limited resources may select energy-
dense diets high in refined grains, added sugars and fats as an effective way to save money”. In
general, a bottle of water cost approximately two dollars and a Coca-Cola beverage cost 99 cents.
In the case of being cost efficient, a consumer will choose a Coca-Cola beverage knowing that it
is the unhealthier choice. Moreover, obesity is not a problem just for Coca-Cola, for it is a
problem for all firms in this industry. (T)
The food and beverage industry deals with common economic issues. For instance, one that
affects companies worldwide is the water drought. It is evident that the beverage industry would
take a large toll when the water drought began. Water is a key ingredient to their recipe.
However, the water drought does not just affect carbonated beverages for it takes 28 gallons of
water to make a cheeseburger. Many do not recognize the importance of the water shortage
because it is an inexpensive good. Many countries are being affected by it but not a lot of people
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have taken action towards it. Companies, however, have seen the effects of the water drought on
their quarterly income statements. Company goals are not being met and this has caused
companies to find other sources of water or develop other ecofriendly methods to find a solution.
Whatever choice a company makes it will certainly take a large amount of money to shift the
company to a different approach. (T)
Technological
There has been an increase in environmental awareness. Because of the importance of the
environment, activists have attacked companies such as coca- cola for using poor chemicals in
their plastic bottles. However to fight claims by activists and to support the community, Coca-
Cola has found a way to create their bottles off polyethylene terephthalate (PET). PET is 100%
more reliable when recycling bottles. Once Coca-Cola presented this method to the Food and
Drug administration (FDA) the FDA had dropped their case with them and allowed Coca-Cola to
proceed with their new bottling method. Due to the values of the company, Coca-Cola did not
have a problem with the change. They partnered with Hoechst-Cleanse Corp to become more
ecofriendly with their bottles. Fortunately, because Coca-Cola and other beverage companies
received the message loud and clear that they should support the environment it has decreased
future threats. However a present threat that they face with the environment is finding a balance
between production and water shortage. Companies have had to reduce their production and find
other methods to create their bottles by reducing the usage of water. Some companies were hurt
more than others and therefore they have lost an unfortunate amount of revenue. The
opportunities that this creates for the beverage industry is the respect they gain from their
consumers. Their brand is therefore becoming more powerful than before. By being eco friendly
the companies are making a statement to the world. (O)
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The food and beverage industry deal with the similar forces worldwide. For instance, adding
onto creating more eco friendly bottles, this industry has merging technological competition.
Considering that Soda Stream and Keurig are partnering to create self-serve carbonated
beverages. This merge causes problems for the food and beverage industry because it will allows
for consumers to create beverages at a lower cost per unit over time. In general this is something
that will affect the profit margin for all companies within the food and beverage industry. What
these companies should look more into is their research and development department in order to
create flavors that that customers would not be able to create at home. (O)
Political–Legal
Child obesity has been a great concern throughout the United States. The Child Nutrition Act
from 1970 allowed educational institutions to provide students with sugar-sweetened beverages.
It was something that highly benefited the firms because they would increase in revenue. By
2006, the largest sellers of sugar-sweetened beverages in the United States had agreed to follow
the guidelines of the Act and provide malnutrition items for students. However, that same year
“the Alliance for a Healthier Generation, A partnership between the William J. Clinton
Foundation and the American Heart Association, announced that they had reached an agreement
with Cadbury-Schweppes, Coca-Cola, and PepsiCo to cut sales of sugar-sweetened beverages in
schools”. The objective of their agreement was to take out sugar-sweetened beverages and limit
the portion size of drinks that were provided to students. As results of the policies and
agreements, 34 states created a state policy that would adopt healthier beverage options and
limitations. In conclusion, offering healthy beverages in schools has been a constant struggle
within the United States. (T)
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Child obesity has been a worldwide concern. Problems continue to arise in this because there is
also a growing concern in children not getting enough exercise. This is also because of the rise in
technology and how much more technologically advanced the younger generation is. Therefore
due to the easily accessibility and high levels of sugar this makes the younger generation a target
in their health. Not all countries provide sugar drinks in their institutions, but there are many
countries who have not regulated the school systems. In other words, although it is a concern
worldwide it is strong is some countries in comparison to others. Child obesity will be an
occurring problem as time goes on, but the countries who later decide to adopt the same policies
to become healthier countries will have examples of what works and what doesn’t. The first step
for countries when fighting child obesity is eliminating sugar sweetened drinks from educational
institutions. (T)
Sociocultural
In this day and age social media has become one of the most traditional things among Americans.
However, for the food and beverage industry to hop on board with such tradition is a difficult
task. What Coca-Cola and other companies are attempting to do is create apps and programs that
allow their consumers to follow their brand while social networking. Social media creates few
opportunities for the beverage industry. It hurts the industry more than creating benefits. That is
because there isn’t much a beverage industry can do in order to stay connected with their
customers. However, a benefit may be that they the beverage industry can follow their
consumers in order to get statistics and use it for their research and development department.
This will allow the firms to get more insight on what their customers want, allowing the firms to
know what to provide and present to the world. (O)
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All industries are constantly trying to get in touch with their customers. In relation to companies
in the United States, companies in the food and beverage industry have learned that social media
is the way to reach their customers. Moreover, companies in this industry have noticed that
another way to reach their customers is through social sporting events. For example the way that
Coca-Cola Co. has applied this concept is by becoming a large sponsor in the Olympics and the
World Cup. Since Coca-Cola many companies have applied the same concept. Many other
companies have also joined the same sporting events as Coca-Cola but they are not limited to
those events. There are still other sporting occasions such as NASCAR, NBA Playoffs, and the
Super Bowl. When companies partner with such events it is a huge investment for the company
but fortunately it is a great turn over because of the marketing that gets done across to customers.
The importance is that such events are tradition to many people around the world – most
importantly the Olympics. More companies should move forward and partner with like sporting
events. (O)
Task Environment
Threat of New Entrants: Low
With the brand strength that Coca-Cola has established it would be difficult for a new entrant to
compete and reach a mass consumer pool. However, it may be possible for new entrants to
succeed in small-scale production that only focuses on a certain market or geographical location.
New entrants would also need an extensive marketing campaign to begin attracting their
consumers. The effect of economies of scale typically benefit mass manufacturers like Coca-
Cola, which makes it more difficult for new entrants to stay in business because they have to
invest a lot more in manufacturing. In addition, new entrants will face strict regulation from EU
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directives concerning the ingredients, labeling, marketing, and safety. It is just part of the process
new entrants must go through in order to be a legitimate competitor. (O)
Bargaining Power of Suppliers: Low
Coca-Cola manufacturers in this market look to suppliers for a range of ingredients such as
sweeteners, sugar, aspartame, and water. The bargaining power of suppliers would not be
effective because they mainly handle commodities and only when commodities become scarce or
have severe market fluctuations do the become a factor for bargaining. Suppliers won’t have
much say in their selling power to bottlers and manufacturers. Currently, water is the most
concerning commodity for Coca-Cola because it operates in a global scale. There are locations
where water is becoming scarce or not meeting manufacturing standards and this directly affects
Coca-Cola sales. (O)
Threat of Substitute Products or Services: Low
There are plenty of substitutes in the beverage industry such as tea, coffee, energy drinks, and
juices. Coca-Cola has a wide range of beverage products including teas and energy drinks. What
may affect the market that Coca-Cola has is consumer health concerns towards soft drinks.
However, Coca-Cola has plenty of low or no calorie drinks, so if new substitute products come
into play it won’t have much of an impact. (O)
Bargaining Power of Buyers: Medium
The distribution of Coca-Cola is achieved in many ways in their global market scale, resulting in
a large amount of buyers. It is common for Coca-Cola to manufacture soft drinks that are ready
for consumption and provide it directly to retailers, which may lower buyer power. Food &
beverage retailers are arguably the most significant buyers and they have some say with either
