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Business proposal

  1. 1. Business PlanCOKE DRINK Page2
  2. 2. Business plan OnCOKE DRINK Prepared by: PATEL SHIVA H. MBA-Sem.3 ROLL NO.-61 Page2
  3. 3. AcknowledgementsFirst of all we would like to thank the almighty god that we are enabling enough todo this term paper. We are very much thankful to our respective course instructorAshraf U Bhuyan for giving us such an interesting project and proving thenecessary suggestion and guidelines. This has provided us the chance of workingwith real life data, which helped us to acquire clear insight about the course. It wasa thoroughly enjoyable experience. This Business Plan will definitely add to ourpractical experience and will help us in professional life.We are grateful to our administration as they provide us with the facility to usecomputer lab. May be, it would have been impossible to finish the Business Plan intime if we didn’t get facility to use computer lab for our own purpose. We areacknowledging to all of those web sites from which we have taken necessary helps.Last but not least, we are proud and feeling lucky enough to have such nicemembers in our group. We have a strong bonding of understanding which hasmade our effort successful and memorable. Page2
  4. 4. Executive Summary The Coke drink Company is the worlds largest beverage company, largestmanufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups in theworld and is one of the largest corporations in the United States. The company is best known forits flagship product Coke drink, invented by pharmacist John Stith Pemberton in 1886. The Cokedrink formula and brand was bought in 1889 by Asa Candler who incorporated The Coke drinkCompany in 1892. Besides its namesake Coke drink beverage, Coke drink currently offers nearly400 brands in over 200 countries or territories and serves 1.5 billion servings each day. The company operates a franchised distribution system dating from 1889 where TheCoke drink Company only produces syrup concentrate which is then sold to various bottlersthroughout the world who hold an exclusive territory. The Coke drink Company is headquartered in Atlanta, Georgia. Its stock is listed on theNYSE and is part of DJIA and S&P 500. Its current chairman and CEO is Muhtar Kent. Page2
  5. 5. Table of ContentsContent: 1. Coke drink International A. Summary B. Vision 2. Management 3. Marketing A. Market Analysis. B. Competitive Analysis C. SWOT Analysis D. Strategy Planning E. Product & Services F. Market & Sales 4. Operation A. Key Professionals B. Organizational Structure C. Human Resource Management D. Product & Service Delivery E. Customer & Service Support F. Facilities 5. Financial Data A. Company Statement B. Profit & Loss Statement C. Balance Sheet Page2 D. Break Eve Analysis
  6. 6. 6. Conclusion.1. COKE DRINK INTERNATIONALA. SUMMARY: Coke drink Enterprises, established in 1986, is a young company by the standards ofthe Coke drink system. Yet each of its franchises has a strong heritage in the traditions ofCoke drink that is the foundation for this Company. The Coke drink Company traces it’s beginning to 1886, when an Atlanta pharmacist,Dr. John Pemberton , began to produce Coke drink syrup for sale in fountain drinks.However the bottling business began in 1899 when two Chattanooga businessmen,Benjamin F. Thomas and Joseph B. Whitehead , secured the exclusive rights to bottle andsell Coke drink for most of the United States from The Coke drink Company. Coke drink bottling system continued to operate as independent, local businesses untilthe early 1980s when bottling franchises began to consolidate. In 1986, The Coke drinkCompany merged some of its company-owned operations with two large ownership groupsthat were for sale, the John T. Lupton franchises and BCI Holding Corporations bottlingholdings, to form Coke drink Enterprises Inc. The Company offered its stock to the publicon November 21, 1986, at a split-adjusted price of $5.50 a share. On an annual basis, totalunit case sales were 880,000 in 1986. In December 1991, a merger between Coke drink Enterprises and the Johnston Cokedrink Bottling Group, Inc. (Johnston) created a larger, stronger Company, again helpingaccelerate bottler consolidation. As part of the merger, the senior management team ofJohnston assumed responsibility for managing the Company, and began a dramatic,successful restructuring in 1992.Unit case sales had climbed to 1.4 billion, and totalrevenues were $5 billion Page2
  7. 7. B. THE VISION STATEMENT OF COKE DRINK COMPANY Our vision statement is to maximize shareowner value over time. In order to achieve this vision, we must create value for all the constraints we serve, including ourconsumers, our customers, our bottlers, and our communities. The Coke drink Company creates value byexecuting comprehensive business strategy guided by six key beliefs: 1. Consumer demand drives everything we do. 2. Brand Coke drink is the core of our business 3. We will serve consumers a broad selection of the nonalcoholic ready-to–drink beverages they want to drink through out the day. 4. We will be the best marketers in the world. 5. We will think and act locally. 6. We will lead as a model corporate citizen. The ultimate objectives of our business strategy are to increase volume, expand our share ofworldwide nonalcoholic ready to drink beverages sales, maximize our long-term cash flows, andcreate economic value added by improving economic profit. The Coke drink system has more than 16 million customers around the world that sells or servesour products directly to consumers. We keenly focus on enhancing value for these customers and helpingthem grow their beverage businesses. We strive to understand each customer’s business and needs,whether that customer is a sophisticated retailer in a developed market a kiosk owner in an emergingmarket. There are nearly 6 million people in the world who are potential consumers of our company’sproduct. Ultimately, our success in achieving our vision depends on our ability to satisfy more of theirbeverage consumption demands and our ability to add value for customers. We achieve this when weplace the right products in the right markets at the right time. Page2
  8. 8. 2. MANAGEMENT:The hierarchy of Coke drink Company is as follows. Page2
  9. 9. 3. MARKETINGA. MARKET ANALYSIS: THE OVERALL MARKET: Being the biggest company in the soft drink industry, Coke drink enjoys the largest market share.This company controls about 59% of the world market.CHANGES IN THE GLOBAL MARKET:The following table can show the worldwide operating segments. Unit case growth Non- All commercial alcoholic Beverages drink10 year compound 5-year compound 2001 annual growth 2002 2002annual growth annual growthCompany Industry Company Industry Company Industry Company Company Company share share per capita Income 6% 5% 5% 5% 4% 4% 18% 9% 70This shows that the market of the company is geographically vast and it is controlling it with greatsuccess. In 2002, the company grew their carbonated soft-drink business by nearly 250 million unit casesand generated record volumes. Because carbonated soft drinks are the largest growth segment within thenonalcoholic ready-to-drink beverage category measured by volume, that is why they are focusing moreon this and they are continually increasing the pace because they know that accelerating this pace iscrucial to their future success. Thus they are increasing their market day by day. The operation incomeearned by Coke drink Company can be illustrated by the following pie chart. Page2
  10. 10. (Figure)This strategy has worked a lot and it has helped them to become the World’s leading Soft DrinkCompany. The global unit sale of the Coke drink Company is increasing from the last ten years. The dataof the global unit sale of the Coke drink Company can be represented by following chart. (Figure) So there is positive growth in the market of the Coke drink Company. There is a worldwidevolume increase by 4% with strong international growth of 5%. This is only due to the innovativemarketing programmers, which has deepened the relationship of the customers and Coke drink. Thefinancial health and success of their bottling partners is a critical component of The Coke drink Page2Companys ability to build and deliver leading brands.
  11. 11. In 2002, the company had worked with their bottlers to turn good intentions into reality byimproving the system economics. The results in 2002 reflect this steadily improving and mutuallyconstructive relationship between the Company and their bottling partners. The main reason behind thisrelationship is to continue realizing shared opportunities for growth, with closer coordination ofoperations including customer relationships, logistics and production.MARKET SHARE BY AREA: Coke drink is the world-renowned soft drink and the company is currently operating through outthe world. The world wide total is about 17.8 billion.The operation review according to the segments is as follows. Operation Review (2002 worldwide unit case volume by operating segment)NORTH AMERICA LATIN EUROPE & ASIA AFRICA AMERICA MIDDLE EAST 30% 25% 22% 17% 6% So the volume is least in the Africa and most in the North America. The data about the marketshare of this company area wise is given in the following table. Page2 The above table shows the geographical earning of the Coke drink Company and from this data;we can find out that the customers of Coke drink are increasing which is shown by the company’s per
  12. 12. capita income. Unit case equals 24 eight-ounce servings. The column, which shows the non-alcoholicbeverages consist of commercially, sold beverages, as estimated by the Company based on availableindustry sources. The country column is derived fromThe Companys unit case volume while the industry column includes nonalcoholic ready-to-drinkbeverages only, as estimated by the Company based on available industry sources. Page2
  13. 13. Country Unit case growth Non- All commercial alcoholic Beverages Drinks 10 year compound annual 5-year compound annual 2002 annual growth 2002 2002 growth growth Company Industry Company Industry Company Industry Company Company Company per share share capita Income North 4 5 3 3 2 2 22 15 398 AmericaUnited States 4 5 3 3 2 2 23 16 419Latin America 6 7 6 6 3 4 24 15 205 Argentina 7 4 6 2 7 2 20 10 236 Brazil 5 5 3 6 3 5 23 13 144 Chile 9 6 5 3 (2) 3 56 23 336 Mexico 7 10 8 9 2 5 22 18 462 Europe 6 3 5 3 2 4 12 6 72& Middle East Eurasia 17 8 6 5 (14) 1 14 5 39 France 8 3 9 3 7 3 9 5 110 Germany 1 2 (1) 1 (6) 1 14 7 193Great Britain 8 2 11 2 8 3 17 6 193 Italy 1 3 4 3 2 2 9 6 104 Middle East 12 12 7 5 4 8 8 3 17 Spain 6 4 8 5 4 4 17 12 264 Page2 Asia 7 6 6 7 10 7 14 5 23 Africa 7 6 8 3 10 6 34 11 34
  14. 14. (Table) In Asian population, which is the satisfied customer of Coke drink, is approximately 3.2 billionand the average consumer enjoys close to two servings of our products each month. Through an intensefocus on Coke drink, innovation and new beverages, the company has achieved volume growth of 10percent in 2002. With developing economies and populations, this region has strong long-term potential,and the company is building an exciting family of beverage brands in addition to expanding thepopularity of our core brands, led by Coke drink. In China, for example, sales of Coke drink increased 6percent. The total unit case sale of Coke drink in Asia can be shown by the following pie chart. (Figure) So the company is emphasizing more in this area and is trying to develop a strategy, which canincrease the growth of the consumption of Coke drink by the people of Asia. Among the countries ofAsia, Japan has the highest percentage, which is about 29%. Among others, Pakistan, India andBangladesh are those countries where the average consumption is increasing day by day. Page2
  15. 15. MARKET SEGMENTS: Market segments are basically those people who take this drink daily and those areas where thedemands is higher then the other areas. There are so many people who take this drink daily and thosepeople who take weekly and those who take less often are always there as well. So, their basic segmentsare those people who take this drink regularly.TARGET MARKET & CUSTOMER: Coke’s commercials basically based on young generations, so, the young generation is the targetmarket of Coke because they want to represent Coke with the youth and energy but they also considerabout the old people they take then as a co-target market. a) Customer Characteristics: First of all the majority don’t care that what they are going to have. In other words, they don’t care before drinking that whether it is “Pepsi” or “coke”. They don’t actually differentiate between these two brands in order to their tastes. b) Customer Needs: Consumers basically drink what they get. They believe on “WHAT COULD THEY SOLD” Consumer’s availability in brands is basically works like Push availability Pull consumer’s demand. c) Customer Buying Decision: Majority of the customer buys what’s price is low. If Coke drink increase their price even 0.10 cents then their sales will decrease. Customer must go for another brand like Pepsi or else For this reason Coke drink have provided their coolers and freezers in the market. They havemaximum number of coolers and freezers in the market. They provide this infrastructure free of cost justto provide child coke to their customer, which they want to be purchase. Their salesman and mechanics regularly visit all the shops where coke has its infrastructure to checkthat either it is in proper condition or not, if not then they immediately change or repair it. Page2
  16. 16. The Coke drink Management System(TCCMS)The Coke drink Company has only one quality system, called The Coke drink ManagementSystem (earlier referred to as The Coke drink Quality System), for its entire bottling operations(Company owned as well as Franchise owned)around the worldOne worldOne Coke drinkOne Global Standard… Page2
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  18. 18. B. COMPETITIVE ANALYSIS COMPETITORS Coke’s major competitor is “PEPSI” and there is no hesitation to say this because every one knows that and all the other cold drinks and water, coffee, tea is the competitors. MAJOR COMPETITORS Consumers firstly decide that they are going to have a soft drink. Then they compete brands with each other. Like they compete Coke with Pepsi and Sprite with 7up and team. So the major competitor of Coke is Pepsi. When they motivate to any other brand or on Coke it’s in instinct basically that based on messages derive certain feelings. But Coke drink thinks in a different way, they believe that RC Cola, new coming Beverages, and all juices, even they take water and tea as their competitors.MAJOR COMPETITORPEPSI INTERNATIONALHISTORY PepsiCo is a world leader in convenient foods and beverages, with revenues of about $27 billionand over 143,000 employees. The company consists of the snack businesses of Frito-Lay North Americaand Frito-Lay International; the beverage businesses of Pepsi-Cola North America, Gatorade/TropicanaNorth America and PepsiCo Beverages International; and Quaker Foods North America, manufacturerand marketer of ready-to-eat cereals and other food products. PepsiCo brands are available in nearly 200countries and territories.Many of PepsiCos brand names are over 100-years-old, but the corporation is relatively young.PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana wasacquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in2001.would entertain the listener with the latest musical selections rendered by violin or piano or Page2both. The new name, “Pepsi Cola”, is derived from the two of the principle ingredients, Pepsin
  19. 19. and Kola Nuts. It was first used on the August 28. At that time, Braham’s advertising praises hisdrink as “Exhilarating, invigorating, aids digestion”.1990-2002 The advertisement of the Pepsi changes to, “You got the right one baby, Uh-Huh!” With theextensive usage of the stars in the ads, the popularity of Pepsi increase. In 1992 Pepsi-Cola formed apartnership with Thomas J. Lipton Co. Today Lipton is the biggest selling ready-to-drink tea brand in theUnited States. Outside the United States, Pepsi-Cola Companys soft drink operations include the businessof Seven-Up International. Pepsi-Cola beverages are available in more than 190 countries and territories.PEPSI’S PRODUCTS • Pepsi • Teem • Miranda • Pepsi Max • Pepsi Lemon • Pepsi Blue • Mountain Dew • 7up Page2
  20. 20. SWOT Analysis:STRENGTHWORLD’S LEADING BRAND Coke drink has strong brand recognition across the globe. The company has a leading brandvalue and a strong brand portfolio. Business-Week and Interbred, a branding consultancy,recognize. Coke drink as one of the leading brands in their top 100 global brands ranking in2006.The Business Week-Interbred valued Coke drink at $67,000 million in 2006. Coke drinkranks well ahead of its close competitor Pepsi which has a ranking of 22 having a brand value of$12,690 million Furthermore; Coke drink owns a large portfolio of product brands. The companyowns four of the top five soft drink brands in the world: Coke drink, Diet Coke, Sprite and Fanta.Strong brands allow the company to introduce brand extensions such as Vanilla Coke, CherryCoke and Coke with Lemon. Over the years, the company has made large investments in brandpromotions. Consequently, Coke drink is one of the best recognized global brands. Thecompany’s strong brand value facilitates customer recall and allows Coke drink to penetrate newmarkets and consolidate existing ones.LARGE SCALE OF OPERATIONS With revenues in excess of $24 billion Coke drink has a large scale of operation. Cokedrink is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentratesand syrups in the world. Coco-Cola is selling trademarked beverage products since the year 1886in the US. The company currently sells its products in more than 200 countries. Of theapproximately 52 billion beverage servings of all types consumed worldwide every day,beverages bearing trademarks owned by or licensed to Coke drink account for more than 1.4billion. The company’s operations are supported by a strong infrastructure across the world.Coke drink owns and operates 32 principal beverage concentrates and/or syrup manufacturingplants located throughout the world. In addition, it owns or has interest in 37 operations with 95principal beverage bottling and canning plants located outside the US. The company also ownsbottled water production and still beverage facilities as well as a facility that manufactures juiceconcentrates. The company’s large scale of operation allows it to feed upcoming markets withrelative ease and enhances its revenue generation capacity.ROBUST REVENUE GROWTH IN THREE SEGMENTS Coke drink’s revenues recorded a double digit growth, in three operating segments. Thesethree segments are Latin America, ‘East, South Asia, and Pacific Rim’ and Bottling investments. Page2Revenues from Latin America grew by 20.4% during fiscal 2006, over 2005. During the sameperiod, revenues from ‘East, South Asia, and Pacific Rim’ grew by 10.6% while revenues from
  21. 21. the bottling investments segment by 19.9%. Together, the three segments of Latin America,‘East, South Asia, and Pacific Rim’ and bottling investments, accounted for 34.8% of totalrevenues during fiscal 2006. Robust revenues growth rates in these segments contributed to top-line growth for Coke drink during 2006.WEAKNESSESNEGATIVE PUBLICITY The company received negative publicity in India during September 2006.The Companywas accused by the Center for Science and Environment (CSE) of selling products containingpesticide residues. Coke drink products sold in and around the Indian national capital regioncontained a hazardous pesticide residue. These pesticides included chemicals which could causecancers, damage the nervous and reproductive systems and reduce bone mineral density. Suchnegative publicity could adversely impact the company’s brand image and the demand for Cokedrink products. This could also have an adverse impact on the company’s growth prospects in theinternational markets.SLUGGISH PERFORMANCE IN NORTH AMERICA Coke drink’s performance in North America was far from robust. North America is Cokedrink’s core market generating about 30% of total revenues during fiscal 2006. Therefore, astrong performance in North America is important for the company. In North America the sale of unit cases did not record any growth. Unit case retailvolume in North America decreased 1% primarily due to weak sparkling beverage trends in thesecond half of 2006 and decline in the warehouse-delivered water and juice businesses.Moreover, the company also expects performance in North America to be weak during 2007. Sluggish performance in North America could impact the company’s future growthprospects and prevent Coke drink from recording a more robust top-line growth. Page2
  22. 22. DECLINE IN CASH FROM OPERATING ACTIVITIES The company’s cash flow from operating activities declined during fiscal 2006. Cashflows from operating activities decreased 7% in 2006 compared to 2005. Net cash provided byoperating activities reached $5,957 million in 2006, from $6,423 million in 2005. Coke drink’scash flows from operating activities in 2006 also decreased compared with 2005 as a result of acontribution of approximately $216 million to a tax-qualified trust to fund retiree medicalbenefits. The decrease was also the result of certain marketing accruals recorded in 2005. Decline in cash from operating activities reduces availability of funds for the company’sinvesting and financing activities, which, in turn, increases the company’s exposure to debtmarkets and fluctuating interest rates.OPPORTUNITIESIf Coke is considered a luxury product. Then there is the tax rate system • 15% - sales tax • 20% - excise duty • 27% - goes to government • 03% - In making Budget After paying all these taxes coke has to pay electricity charges. We have to spend ondistributions. After paying all these expenses Coke’s margin squeezed and consumers have topay for increasing tariffs.These are the opportunities through which we can increase the price and can get profits.THREATS & RISKS There are much more threats in increasing prices. Because same problem of substitute. IfCoke increase the price lets say 1 rupee. Then people definitely won’t go for coke. They have thebest substitute of Coke that is Pepsi. So these are the threats in increasing prices. Coke will losethe margin of its profit and can face loss. Page2
  23. 23. STRATEGIC PLANNINGIn the year 2002, the company had a great success, as the strategy worked which resulted in making Cokedrink Company the world’s leading company. In 2001, company accomplished the crust of its strategy as • Worldwide volume increased by 4 percent with strong international growth of 5 percent and clear signs that our North American business is growing solidly and predictable. • Earnings per share grew by 82 percent, as we delivered on our commitment to create volume growth while aggressively • Return on common equity grew from 23 percent in 2000 to 38 percent this year. • Return on capital increased from 16 percent in 2000 to 27 percent in 2001. • The company has generated free cash flow of $3.1 billion, up from $2.8 billion in 2000, a clear indication of its underlying financial strength.The strategy for the future of the company is very straightforward. The marketing strategy for the year2002 is as follows, • Accelerate carbonated soft-drink growth, led by Coke drink. • Selectively broaden the family of beverage brands to drive profitable growth. • Grow system profitability and capability together with our bottling partners. • Serve customers with creativity and consistency to generate growth across all channels. • Direct investments to highest potential areas across markets. • Drive efficiency and cost-effectiveness everywhere. Page2
  24. 24. C . PRODUCTS: There are different brands of the Coke drink Company, which are currently in use through out theworld. This company not only deals in the carbonated drinks but also other drinks. While launching itsproduct, the marketing team considers the culture of the country.MAJOR BRANDS OF COKE DRINK • Coke • Sprite • Fanta • Diet coke • Coke classicMARKET POSITIONINGPRODUCT RANGEThe total range of Coke drink Company in Worldincludes: • Coke. • Sprite. • Fanta. • Diet Coke.And company offers their products in different bottle sizes these include: • SSRB (standers size returnable bottle) • LRB (litter returnable bottle) • NRB (no return bottle or disposable bottle) • PET 1.5 (1.5 litter plastic bottle) • PET 2.0 (2.0 litter plastic bottle) • CAN (tin pack 330 ml) Page2
  25. 25. PACKINGCoke drink products are available in different packing • 24 regular bottle shell • 6 bottle pack for 1.5 pets • 12 bottles in a pack for disposable bottle • 24 cans in one pack.EXPECTATIONS FOR THE COMING YEAR Every thing starts from the attitude of consumer’s behavior. And the basic key to attractthe consumers is to throw the “money away”. And positive feeling felling with the brand, which they used to have Coke wants toadvertise their products heavily in the coming year. And it will take the 10% of their profits. Andwhen we take it as a global level it is $ I billion. Coming year is the challenging year for the industry of Coke. They have to take lots ofdecisions that how to increase the production and where they have to spend money.For gaining success in coming year they have to have some important things like: 1. Loyal consumers are important for company’s success. 2. Workers should be the brand centric not the promotion centric. 3. They should know how much to for the brand activities. 4. They should also know that how much to do with the promotion activities for brand... Page2
  26. 26. C. MARKETING & SALESMARKETING STRATEGY Our local marketing strategy enables Coke to listen to all the voices around the worldasking for beverages that span the entire spectrum of tastes and occasions. What people want in abeverage is a reflection of who they are, where they live, how they work and play, and how theyrelax and recharge. Whether youre a student in the United States enjoying a refreshing Cokedrink, a woman in Italy taking a tea break, a child in Peru asking for a juice drink, or a couple inKorea buying bottled water after a run together, were there for you. We are determined not onlyto make great drinks, but also to contribute to communities around the world through ourcommitments to education, health, wellness, and diversity. Coke strives to be a good neighbor,consistently shaping our business decisions to improve the quality of life in the communities inwhich we do business. Its a special thing to have billions of friends around the world, and wenever forget it.SALES PROMOTION ACTIVITIESCOKE DRINK CRICKET Cricket the most sought after; watched & played game in World.the game of cricket has beenowned by various brands in the industry for the promotion of their products over a period of time. It hasranged from tobacco to lubricants to communication companies to banks to airlines & lately to thebeverage industry. The competition has become tougher & tougher as the time has progressed. Coke drink signed a sponsorship agreement with eight of Pakistan’s National cricket players.Coke drink realizing the fact that cricket is a very strong element by which it can reach it consumers &masses invested in the opportunity and launched a massive campaign on mass media showing all thesecricket stars endorsing & complimenting Coke drink brand. The Coke drink Company developed threeTV commercials & four testimonial ads with the player & ran them on the national net work duringvarious cricket matches. These bold steps taken by the Coke drink marketing unit acclaimed them manyacknowledgements across the board. This campaign helped Coke drink to establish its association withthe game & the player. Page2
  27. 27. COKE DRINK CONCERTS The TVC campaign focused on the hectic lifestyle of a pop star who found respite & reliefthrough Coke drink in short moments that he had to himself during a concert. Coke drink’s brandpositioning of providing deep down refreshment for the body, soul & mind were captured accurately inthe TVC & depicted aptly how the drink completes the moment for Aurar.COKE DRINK GO-RED Quenching the thirst of motorist, pedestrians & passerby’s during hottest summer season, Cokedrink’s “GO-RED” teams went out into the cities main quadrants to “serve & refresh” on the spot withice-cold Coke drinks at discounted prices backed by a heavy FM announcement campaign the “GO-RED”stall, served well to promote the Coke drink industry. .COKE DRINK SHOPPING FESTIVAL Coke drink hosted “The Coke drink Shopping Festival” Lahore’s first shopping festival, aresounding success with tempting discounts, live music, great prizes & fire works. Liberty marketingGulberg was a hive of activity during the weeklong shopping extravaganza. The in augural event provedso popular that it is now set to become an annual fixture.COKE DRINK PET PROMOTION In 1996, Coke drink launched 1.5 liter Pet contour bottle for the first time in World. Targetinghouse wives & family home, Coke drink’s 1.5 liter Pet bottle, took the limelight & gained momentumwith a campaign promoting the unique packaging and its numerous consumer benefits .A treat for thefamily, Coke drink’s PET was offered through a “price-off” promotion that said……….Go out & getsomeCOKE DRINK RAMZAN CAMPAIGN A very special occasion for the people of World Ramzan saw another very special Coke drink’spromotion, marketing the popular 1.5 liter PET bottle & the 1 liter bottle with a super price-offpromotion. The emphasis on enjoying Coke drink at “Iftar” with friends & family.COKE DRINK WONDER OF THE WORLD PROMOTION In July 2000, Coke drink set the stage of the grand UTC promotion. Coke drink went ahead withthe idea of giving consumer chances to win fabulous, magical “dream vacation” to numerous “wonderdestination” throughout the world on every purchase of a 250 ml RGB bottle of Coke drink, Sprite, &Fanta.The promotion gave consumers a chance to win free drink, a trip to PARIS, HOLLYWOOD,NEWYORK, SINGAPORE & CAIRO along with airfare & four nights free stay in these dream lands.The promotion saw avid consumer collecting Coke drink ‘Crown caps’ & sparked a keen response fromthe public , rendering an outstanding testimonial campaign in the second phase, highlighting the winnersover whelmed in the magical delight of their favorite beverage Coke drink. Page2
  28. 28. COKE DRINK & NOKIA In August 2001, the new under-the-crown promotion “Nikla Kiya?”(What have u won) waslaunched in collaboration with Chimera Nokia.The promotion gave consumer a chance to win thousand’sof Coke drink branded Nokia 3310 cellular phones on every purchase of 750ml RGB bottle of Coke drink,Sprite, & Fanta.The other highlight of promotion was the “Caught Red Handed” campaign. BrandedCoke drink with ‘caught red handed’ team in them went to Lahore & Karachi for three days, with targetthat anyone being caught drinking Coke drink will be awarded a nokia 3310 mobile phone & if someoneis caught talking on a nokia mobile will win free supply of Coke drink. Caught red handed become a hugesuccess among the masses as it was one to one interaction between the Coke drink brand & theconsumers. This activity helped billed confidence and brand loyalty among core consumers.COKE DRINK TV MAZZA The coke drink new campaign is coke drink tv mazza, it is a utc scheme in which people aregetting television sets of different sizes. These days this scheme is very popular among the people.COKE DRINK & MAC DONALD’S Coke drink & key account of MC Donald’s launched the “we go together” joint promotion toreinstate amongst consumers a real sense of the affinity that, both shares globally. The promotion kickedoff with pos material (Danglers, Bunting etc) displayed at all MC Donald’s restaurants along with aspecial offer for coke & fries.FANTA & SPRITE LAUNCHED In November 2000moving on to the Sprite & Fanta brands, the consumers in Worldwitnessed asoft launch in essence. The Coke drink Company declared the new “Non-Returnable” bottles of Sprite &Fanta as the “New, On the Go Packs” flaunting the innovative packaging convenience. Fanta & Sprite aresure to enjoy considerable success in WorldDIET COKE After the acquisition of the individual local franchise bottling facilities in 1996, the company hassuccessfully launched its first new product, diet coke, for the first time in almost 3 years. The was linkedwith three fashion shows as Diet Coke is related to fashion & fitness, but the major hit was thematicfashion shows in restaurants, which are the key accounts of the company as this has been never donebefore in Pakistan. Page2
  29. 29. ADVERTISEMENTCoke drink company use different mediums • Print media • Pos material • Tv commercial • Billboards and holdingsPRINT MEDIA They often use print media for advertisement. They have a separate department for printmedia.POS MATERIAL Pos material mean point of sale material this includes: posters and stickers display in thestores and in different areas.TV COMMERCIALS As everybody know that TV is a most common entertaining medium so TV commercialsis one of the most attractive way of doing advertisement. So Coke drink Company does regularTV commercials on different channels.BILLBOARDS AND HOLDINGS Coke drink is very much conscious about their billboards and holdings. They have somany sites in different locations for their billboards.DISTRIBUTION CHANNELSCoke drink Company makes two types of selling • Direct selling Page2 • Indirect selling
  30. 30. DIRECT SELLING In direct selling they supply their products in shops by using their own transports. Theyhave almost 450 vehicles to supply their bottles. In this type of selling company have more profitmargin.INDIRECT SELLING They have their whole sellers and agencies to cover all area. Because it is very difficultfor them to cover all area of Worldby their own so they have so many whole sellers and agenciesto assure their customers for availability of coke drink products.PROMOTION STRATEGIESGETTING SHELVES They gets or purchase shelves in big departmental stores and display their products in thatshelves in that style which show their product more clear and more attractive for the consumers.EYE CATCHING POSITION Salesman of the coke drink company positions their freezers and their products in eye-catching positions. Normally they keep their freezers near the entrance of the stores.SALE PROMOTION Company also do sponsorships with different college and school’s cafes and sponsorstheir sports events and other extra curriculum activities for getting market share.UTC SCHEME UTC mean under the crown scheme, coke drink often do this type of scheme and theyoffer very handy prizes in it. Like once they offer bicycles, caps, tv sets, cash prizes etc. Thisscheme is very much popular among children4. Operations:A. KEY PERSONNEL : * E. Neville Isdell, Chairman and Chief Executive Officer * Gary P. Fayard, Chief Financial Officer Page2 * Jose Octavio Reyes, President of Latin America
  31. 31. B. ORGANIZATIONAL STRUCTURE:AVIATION – Its creating the best of the best.The Coke drink Company is a truly global company, and we operate in over 200countries around the world. From Atlanta to London to Bangkok to Santiago, ourpeople make a difference everywhere we work. Here we have the opportunity tomake a difference and create ways to connect our executives, guests and othersaround the world in an expeditious, safe and comfortable manner. We never stoplooking for the best and the brightest.BUSINESS/ADMINISTRATIVE SERVICES – It’s the business of running ourbusiness.It takes thousands of people working together to keep our multi-billion dollaroperation running smoothly. At The Coke drink Company, we know just howvaluable your efforts are to our continued success. That’s why we offeropportunities that recognize your contributions and reward your efforts.Opportunities are available in Administration, Facilities Management, PresentationGraphics and Archives/Records Maintenance. If you want a career that can takeyou places, you’ll like what you find at The Coke drink Company.BUSINESS MANAGEMENT – It’s the strategy that drives our future.Where is the next big opportunity for The Coke drink Company? What will ourcompetitors be doing next week…next year…in the next decade? Your insightsand analysis will help find the answers. Here we take on big challenges and makebold plans for the future. Are you ready to share your ideas with some of the bestthinkers in business? Opportunities are available in Strategic Planning andBusiness Development.FINANCE - It’s a multi-billion dollar challenge.The Finance function at The Coke drink Company offers challenges andopportunities that are simply world-class. We have opportunities available inAccounting, Financial Analysis, Audit, Business Development, Tax and Treasury.Regardless of your background or level of experience, this may be the perfectplace to share your talent with the world. Page2
  32. 32. C. HUMAN RESOURCES: The key to our success is our people. It’s been the same story from day one.At The Coke drink Company, we understand the importance of Human Resources,which is why we have one of the most robust departments you’ll find just aboutanywhere. Opportunities include Generalist, Staffing, Training, Compensation andBenefits, Organizational Development, Employee Relations and Compliance andOccupational Health. If you can keep our people out in front, we can offer you acareer with endless potential.D. PRODUCTS & DELIVERY SERVICE:FACILITATING THE PRODUCT BY INFRASTRUCTURE: For providing their product in good manner company has provided infrastructure theseincludes: • Vizi cooler • Freezers • Display racks • Free empty bottles and shells for bottlesINFORMATION TECHNOLOGY – It’s keeping The Coke drink Company a few stepsbeyond the cutting-edge. As one of the best known brands on the planet, we know the importance of technology.That’s why we’re always thinking about what’s now and what’s next and investing in the peopleand the technologies that will power our company for years to come. We have opportunities inApplication Development and Support, Operations, IT Architecture, Infrastructure SystemsSupport, Network Management, Business Systems Planning, SAP, Database Management andTechnical Training. If you want your talent to make a global impact, this may be youropportunity.INNOVATION – It’s about the next big idea. What will be our next success story? A new product? A new packaging system?Something so new the world has never seen anything like it? At The Coke drink Company, your Page2ideas will make the difference. We’re always searching for what’s next. That’s why we’re almost
  33. 33. always ready to talk to someone like you. We have opportunities available in NewProducts/Services Development, Laboratory Analysis, Research & Development andSRA/Environmental. If you’re ready to make a breakthrough, this could be the break you’vebeen seeking.MANUFACTURING – It’s helping to quench the thirst of the world. Creating some of the best selling beverages in the world takes some of the besttechnology around and some of the very best people in the business. At The Coke drinkCompany, our Manufacturing and Maintenance teams are beyond compare. That’s why, yearafter year, our beverages are enjoyed by billions of people…billions of times.MARKETING – It’s driving the success of the one of the world’s best knownbrands. The strength of our brands is tied directly to the people behind them. It’s your ideas andinnovative thinking that make The Coke drink Company a global powerhouse. Are you ready tomake your mark? We have opportunities available in Brand Management, Creative Services,Marketing Research, Advertising, Media, Category Management, Channel and CustomerMarketing, Marketing Asset Management, Promotions and Merchandising/Licensing. If youhave the ability, this may be your opportunity to put your talent in a multi-billion dollar spotlight.SALES AND ACCOUNT MANAGEMENT – It’s representing The Coke drinkCompany to the world. Millions of servings a day, billions of dollars a year. And behind every sale is someonelike you. At The Coke drink Company, we give our people the resources they need to build long-term relationships with customers. And after more than a century of success, we have evenbigger plans for the future. That’s where you come in. We have opportunities available inAccount Management, Operations Management, Network Account Management and SalesAnalysis/Decision Support.SUPPLY CHAIN FUNCTION – its ensuring customers everywhere stay refreshed. Operating a global business places tremendous demands on the supply chain. That’s whyat The Coke drink Company, you’ll find the very best people answering the call everywhere wedo business. We have opportunities available in Distribution and Logistics, Procurement,Equipment Services and Customer Service. It’s an amazing challenge, with equally amazingopportunities for top performersTECHNICAL FUNCTION – It’s making the best even better. Just because you’re the very best, you can’t simply stand still. At The Coke drink Company,we continuously strive for better ways to create our products. How can we improve ourmanufacturing, raw materials, packaging and more? It’s up to you. Are you up to the challenge? Page2We have opportunities available in Engineering and Quality Assurance. Bring us your ideas andwatch how far they can take you.
  34. 34. D. Customer service : The second key element of our business imperatives is to develop each of our markets byproviding superior customer service and quality products. In Coke drink Hellenic we work hard to adapt our business to the changing needs of ourcustomers. We initiate a number of customer-specific programmed. This aims to facilitate across-functional approach to planning for the purpose of better aligning our organization with theway our customers do business. The goal of this approach is to create value for our customers. Improved preparation ofjoint annual plans encompassing promotional planning and revenue growth initiatives, inventorymanagement and customer-specific cooler placement strategies, are examples of what we believewill bring additional value to our customer relationships. In serving consumers our blueprint can be summarized in four words: availability,affordability, acceptability and activation.AVAILABILITY We place our range of products within easy reach of consumers in the right package, inthe right location, at the right time. We focus on developing strong relationships with our customers to ensure that the rightproducts are in stock, highly visible and readily accessible wherever and whenever consumersmay desire a non-alcoholic beverage.AFFORDABILITY We offer a wide variety of desirable, premium quality products, in packages appropriatefor the occasion, at the right price. In doing so, we aim to reach as many consumers as possible while taking into account thediffering levels of purchasing power in the countries in which we operate.ACCEPTABILITY We supply an extensive and growing range of products that meet the highest qualitystandards in each country, increasing their acceptability to consumers. We have a detailed understanding of consumer needs and access to the most effectivecommunications channels. Combined with our experience in quality control, customer serviceand efficient distribution, we are able to reach out to customers and consumers in each of our Page2markets and meet their demands.
  35. 35. ACTIVATION We motivate consumers to choose our products by improving product availability andattractiveness at the point of purchase and by building brand strength in our local markets.We achieve this in close cooperation with our customers through: * the placement of cold drink equipment, such as coolers and vending machines * the provision of signage and other point-of-sale materials * the implementation of local marketing and promotional initiatives Page2
  36. 36. 5. FINANCIAL DATACOMPANY STATISTICS: The statistics of this company is impressive. Since it is operating through out the world that iswhy the number of employees and the bottling equipment’s is highest among the other bottlingcompanies. There is a constant increase in every aspect when we compare the statistics of 2001 and thestatistics of 2002. This is because; Coke drink Company is increasing its volume day by day. Theexpansion of this company, which shows the success of Coke drink brands, results in the percentagechange in the statistics of the two years. The statistics is as follows. (Table) 2002ª 2001Equivalent cases 4.2 billion 3.8 billion Bottle and cans 87% 87% Fountain 13% 13%Employees 72,000 67,000Vehicles 54,000 52,000Cold drink equipment’s 2.4 million 2.3 millionFacilities Production only 25 25 Distribution 385 361 Page2 Combination 53 50
  37. 37. Total 463 436Percent of North America population coverage 80% 72%Number of States of Operation 46 46Bottle and can equivalent case package distribution Cans 44% 45% Non-refillable bottles 52% 51% Refillable bottles 4% 4%Capital structure Net debt to total capital ratio 63% 59% EBITDA interest coverage 3 3 Weighted average cost of debt 6.3% 6.8%Key Statistics Constant territory bottle and can volume growth 3% ½% Bottle and can net revenues per case change Flat 2% Bottle and can cost of sales per physical case change 1 ½% Reported EBITDA (in billions) $1.95 $2.39 Reported EBITDA change (18)% 9% Capital expenditures( in billions) $0.97 $1.18 Page2
  38. 38. %-age of net operating revenues 6% 8% Coverage of North American Can/bottle volume 83% 74%EBITDA is the Earnings before interest, taxes, depreciation, and amortization, and othernon-operating items. • Net Debt is the Long-term debt plus current portion of long-term debt less cash and marketable securities. • Equivalent Case or Unit Case is the physical case and fountain gallons converted to a standard unit of measure defined as 24 eight-ounce servings or 192 ounces per equivalent case sold by Coke drink Enterprises. Page2
  39. 39. PROFIT & LOSS STATEMENT: This company is financially very strong. It is due to the strong finances, the company is stillsurviving the ups and down of the business world. The financial report of Coke drink Company of theyear 2001 and 2000 along with the percentage change is as follows. (Table) Year Ended December 31, (In millions except per share data, ratios and growth rates) 2002 2001 Percentage changeNet operating revenues 20,092 19,889 1%Operating income 5,352 3,691 45%Net income 3,969 2,177 82%Net income per share (basic) 1.601 0.882 82%Net income per share (diluted) 1.601 0.882 82%Net cash provided by operating activities 4,110 3,585 15%Business reinvestment (963) (779) 24%Dividends paid (1,791) (1,685) 6%Share repurchase activity (277) (133) 108%Free cash flow 3,147 2,806 12%Return on capital 26.6% 16.2% - Page2Return on common equity 38.5% 23.1% -
  40. 40. Unit case sales (in billions) International operations 12.5 11.9 5% North America operations 5.3 5.2 2% Worldwide 17.8 17.1 4% 2002 basic and diluted net income per share includes a non-cash gain of $.02 per share aftertaxes, which was recognized on the issuance of stock by Coke drink Enterprises Inc., one of the equityinvestors of this company.2002 basic and diluted net income per share includes the following charges: • $.24 per share after income taxes related to an organizational Realignment. • $.19 per share after income taxes related to the Companys portion of charges recorded by the investors of the company. • $.16 per share after income taxes related to the impairment of certain bottling, manufacturing and intangible assets. • $.05 per share after income taxes related to the settlement terms of a discrimination lawsuit. • $.01 per share after income taxes related to incremental marketing expenses in Central Europe. These charges are partially offset by a gain of $.05 per share after income taxes related to themerger of Coke drink Beverages plc. and Hellenic Bottling Company S.A. and $.04 per shareafter income taxes related to benefits from a tax rate reduction in Germany and from favorabletax planning strategies. Page2
  41. 41. DIVIDEND AND CASH INVESTMENT PLAN: The Dividend and Cash Investment Plan permits shareowners of record to reinvest dividendsfrom Company stock in shares of The Coke drink Company. The Plan provides a convenient, economicaland systematic method of acquiring additional shares of our common stock. All shareowners of record areeligible to participate. Shareowners also may purchase Company stock through voluntary cashinvestments of up to $125,000 per year. At year-end, 76 percent of the Companys shareowners of recordwere participants in the Plan. In 2002, shareowners invested $36 million in dividends and $31 million incash in the Plan Page2
  42. 42. BALANCE SHEETThe Coke drink Company and SubsidiariesCondensed Consolidated Balance Sheets 2009(In millions except par value) April 3, 2009ASSETSCURRENT ASSETS Cash and cash equivalents $ 6,816 Marketable securities 263 Trade accounts receivable, less allowances 3,139 Inventories 2,298 Prepaid expenses and other assets 2,198TOTAL CURRENT ASSETS 14,714INVESTMENTS Equity method investments: Coke drink Hellenic Bottling Company S.A. 1,386 Coke drink FEMSA, S.A.B. de C.V. 840 Coke drink Amatol Limited 680 Coke drink Enterprises Inc. - Other, principally bottling companies and joint ventures 2,410 Other investments, principally bottling companies 441 Page2TOTAL INVESTMENTS 5,757
  43. 43. OTHER ASSETS 1,793PROPERTY, PLANT AND EQUIPMENT — net 8,425TRADEMARKS WITH INDEFINITE LIVES 6,042GOODWILL 3,988OTHER INTANGIBLE ASSETS 2,384 TOTAL ASSETS $ 43,103LIABILITIES AND EQUITYCURRENT LIABILITIES Accounts payable and accrued expenses $ 5,651 Loans and notes payable 6,701 Current maturities of long-term debt 461 Accrued income taxes 356TOTAL CURRENT LIABILITIES 13,169LONG-TERM DEBT 5,017OTHER LIABILITIES 2,944DEFERRED INCOME TAXES 865THE COKE DRINK COMPANY SHAREOWNERS EQUITY Common stock, $0.25 par value; Authorized — 5,600 shares 880 Capital surplus 8,021 Reinvested earnings 38,911 Accumulated other comprehensive income (loss) (2,893) Treasury stock, at cost (24,207) Page2EQUITY ATTRIBUTABLE TO SHAREOWNERS OF THE COKE DRINK 20,712
  44. 44. COMPANYEQUITY ATTRIBUTABLE TO NONCONTROLLING INTERESTS 396TOTAL EQUITY 21,108 TOTAL LIABILITIES AND EQUITY $ 43,103Note:The financial information included in this section should be read in conjunction with Managements Discussionand Analysis of Financial Condition and Results of Operations and Notes to Consolidated Financial Statementscontained in our Companys 2009 Quarterly Report on Form 10-Q and 2008 Annual Report on Form 10-K. Page2
  45. 45. BREAKEVEN ANALYSIS AT COKE DRINK COMPANYI. THE ORGANIZATION: COKE DRINK COMPANY Who does not know this leading beverage company? In terms of market share and brandexposure, Coke drink (hereinafter referred to as the Company or the Organization) has the “say”.It is a very successful organization that almost everyone knows with an asset in the precedingyear reaching at least $43 billion in its 2007 consolidated financial statements. Moreover, the networth of this company is accounted at $27 billion. As stated in its 2007 Financial report, this beverage organization is the leading name in its line ofbusiness that manufactures, distributes and markets non-alcoholic drinks, syrups as well as concentrates.Its products bearing the Coke drink brand and other brand names under the organizations trademarkshave been sold in the United states since 1886 and with great success, are currently being sold in morethan 200 countries worldwide. The organization was incorporated as early as 1919 under the guiding laws of the United States ofAmerica, specifically in the state of Delaware. Daily, Coke drink is serving 1.5 billion of non-alcoholicdrinks to its thirsty customers.The annual Financial information of the organization is available at its website, It can be specifically found at the following url: ACTIVITIES OF THE ORGANIZATION: Generally, a multi-billion dollar company such as Coke drink has a long list of activities. In eachof its activity, no matter how small it can be in a unit basis, but since there are more than 200 countries toconsider, a proper analysis must be taken into account in pursuing an activity or not. Any planned activitymust be properly analyzed as to its cost versus its benefit. One of the notable and fresh acts that the organization has decided is in its promotional activities.Last November 11, 2008 Coke drink has issued a press release on its partnership with the soccer superstarMemo, also known by his complete name as Francisco Guillermo Ochoa. Certainly, this move of theOrganization is not a decision that took over for a single night but a long process of research and analysisif this would be of good returns to the Company. A company or an organization like Coke drink will notsucceed to its current status if its decisions are not based on solid profitable grounds. This means thatCoke drink realized that with Memo, it can increase its sales and turn it into profit. This is where break-even analysis comes in. Page2
  46. 46. To give detail to the said decision, and to identify some needed information in making thebreakeven analysis a usable tool, the following are identified: 1. Unit of measurement used for the partnership with Memo: This is the length of time the partnership lasts and the extent of activities Memo has to do such services for the Company such as autograph signing, promotions to customers and other promotional procedures in favor of the Organization and its products: 2. Revenue gained through the partnership: Estimated $48 million in sales of memorabilia and more sales of Coke drink branded products in Latin America are. Each promotional month is estimated to gain $4 million. 3. Variable cost of the partnership: Incremental costs for the following: (a) customer appearance (b) Autograph signing (c) Printed and media promotions (i.e.) $5,000 per hour of any of these activities. (d) Production cost of the memorabilia related to Memo that are sold (e) Production cost of the additional sales or Coke drink branded products resulted by the partnership with memo 4. Fixed cost for the period of partnership: the Contract of partnership for a year amounting to $15 million. Although these are estimations, once the company recovers the $15 million fixed cost, which isthe contract price with Memo and the variables costs that it would incur, Coke drink will be breakingeven with its expense already. That means after breaking even it has to pay only per activity that it mustrequire Memo to perform and the variable cost of the memorabilia and additional product sales. Noactivity, no cost to incur. Still, at the end of the year, the contract of partnership between memo and Cokedrink proves profitable.III. FUTURE ACTIVITIES: Coke drink surely has lots of plans. One of the possible decisions that it might make, andtheir respective relevant and irrelevant costs are shown in the following matrix: Possible Decisions --> Contracting every bottling activities out of the company or outsourcing them instead of bottling the products Type of Activities themselves; and Page2 Relevant activities and their 1. The current cost of workers salaries and wages within the
  47. 47. costs bottling division in the Coke drink companys premises (estimated annual cost, $130 million) 2. The cost of direct materials in making bottles such as glasses, water, chemicals, etc. ( estimated annual cost, $63 million) Irrelevant activities and their 1. Corporate main office lighting and other minor utilities costs (estimated annual cost, $120 thousand) 2. Salary of the janitors who cleans the main office building (estimated annual cost, $360 thousand) The above matrix indicates the kind of costs that Coke drink have. The relevant costs,these will be the direct bases of decisions the Company may make and these costs will be thedetermining factor if the organization would go on with the plan to outsource or maintain itscurrent activity of having the bottling department in-house. On the other hand, the irrelevant costs are the ones that are committed by the entireorganization but these costs are not in any way directly related to the issue at hand: the plan tooutsource the bottling plants. However, in some cases, these irrelevant costs might be allocatedin some way or another in other earning departments. Irrelevant costs are not used in the cost-volume-profit analysis or break-even analysis and eventually, not used in decision making as thename suggests, it is “irrelevant”.IV. ALLOCATION OF INDIRECT COSTS SFAS 151 is adopted by the Coke drink company in treating the costs to be allocated. Itsidle capacity, freight and handling costs together with other allocable costs such as spoilage andloss from wastage in production/raw materials are deducted as period costs, which means, theyare expensed outright without getting through the inventory stage. However, in terms of production overhead, such as light, utility and other allocableoverhead costs, it is allocated as part of the inventory under “normal capacity” (The Coke drink,2008) of production facilities The company has a cost of goods sold amounting to $2 billion and allocable totalallocable cost is estimated at 10% of the goods sold which means it would reach up to $200million. What is the implication of this? This means that if the cost is not allocated to the Page2production, they would be expensed outright and would not wait until the goods are sold before
  48. 48. they can be accounted for. But in the long run, the same amount will be generated for the bottomamount which is operating income. Just like most of the companies, Coke drink uses a peanut-butter costing spreading thecosts that are not directly identifiable to those products that could take these costs. It is then aproduction cost rather than a period cost that is outright expensed. In a certain organization, just like Coke drink, there are non-earning departments and thesedepartments are only supporting the main function of the organization. The main function is thedepartment “working for the money” but obviously without the support, the money cannot be generatedas well. Say, the finance and marketing departments are only supporting the production department. It isthe production that “creates” money for the organization. But as mentioned, without the help of finance toproperly manage the assets and without the marketing department making the products interesting andsalable, the production department cannot do anything to earn that money. Thus, it may as well be fair toallocate the costs incurred by these support departments to the main department. In this case, allocatingthe cost of non-revenue generating finance and marketing to the production department that mainlygenerates the sales is viewed as a fair policy. However many propose the activity-based costing to bemore effective because every department has a cost driver that can be considered a fairer valuation of costfor a certain cost center.V- The Use of ABC- the Activity Based Costing As mentioned, proponents of ABC argue that this costing system is more useful. As for Coke drinkcompany, many, if not all of its activities has cost drivers if they need to have a cost. Talking back about the real situation presented in the firth part (I), the Organization partnering withMemo has many costs and cost drivers. These are the two good examples: 1. Autograph signing: the very obvious cost driver for this would be the time spent by Memo in signing the autographs of his fans while promoting the Coke drink products at the same time. Estimated cost of autograph signing in a year can total to 60 hours paying Memo $5,000 per hour and that would be $300,000 and this is only for autograph signing. 2. Another cost that Memo can cause the organization would be on memorabilia sales. Say, a T-shirt with his various poses endorsing Coke drink branded products, memo can bill Coke drink for it based on the volume of T-shirts printed and sold/given by the company. This means that the cost driver for this “T-Shirt with Memos image” activity would be the number of T-shirts printed. Estimates number of T-shirts is 5 Million and Memo charges $1.50 per shirt in using his name and image and thus he is entitled 7.5 million payments from Coke drink. The above situations, activities and their costs simply indicate the use of ABC depicts a more Page2accurate result than simply spreading the costs arbitrarily on the products.
  49. 49. Costing a product requires a thorough examination, analysis and understanding of the companysactivities. As presented, one might use cost allocation technique or activity based costing.CONCLUSION: Coke drink no doubt come the heart beat of Pakistanis. Coke drink is one of the leaders insponsoring the most important, thrilling events. E.g. Cricket matches concerts and many other socialoccasions. Event at the present they are organizing a Basant festival for which they busily organizingstuff. END Page2