GLOBAL BUSINESS STRATEGY 2 GLOBAL BUSINESS STRATEGY INTRODUCTION Global strategy as defined in business terms is an organization's strategic guide to globalization. A sound global strategy should address these questions: what must be (versus what is) the extent of market presence in the world's major markets? How to build the necessary global presence? What must be and (versus what is) the optimal locations around the world for the various value chain activities? How to run global presence into global competitive advantage? A global strategy may be appropriate in industries where firms are faced with strong pressures for cost reduction but with weak pressures for local responsiveness. Therefore, it allows these firms to sell a standardized product worldwide. However, fixed costs (capital equipment) are substantial. Nevertheless, these firms are able to take advantage of scale economies and experience curve effects, because it is able to mass-produce a standard product, which can be exported (providing that demand is greater than the costs involved). Global strategies require firms to tightly coordinate their product and pricing strategies across international markets and locations, and therefore firms that pursue a global strategy are typically highly centralized. Global strategy involves thinking in an integrated way about all aspects of a business-its suppliers, production sites, markets, and competition. It involves assessing every product or service from the perspective of both domestic and international market standards. It means embedding international perspectives in product formulations at the point of design, not as afterthoughts. It means meeting world standards even before seeking world markets and being world class even in local markets. It means deepening the company's understanding of local and cultural differences in order to become truly global. However I am going to take a case study of Coca cola Company, its global business strategy and how it utilizes it to become successful in the global market. According to a report by United State Securities and Exchange Commission (2006) the Coca-Cola Company was established in Atlanta, Georgia, in the year 1886. The company is considered to be the world number one non-alcoholic beverages company, leading in manufacturing, marketing and distribution of its product (concentrate and syrups). Concentrates and syrups are being sold out to bottling companies for final dilutions and packaging to consumers, Coca-Cola Company produces a wide range of about 500 different beverage brands across the world. In the late 1920’s the company begins its journey for globalization and presently operating in more than 200 countries following a simple global formula “Provide a moment of refreshment for a small amount of money – a million times a day”. The Coca-Cola Company together with the bottling companies forms the best production and distribution system in the .

1. GLOBAL BUSINESS STRATEGY
2
GLOBAL BUSINESS STRATEGY
INTRODUCTION
Global strategy as defined in business terms is an
organization's strategic guide to globalization. A sound global
strategy should address these questions: what must be (versus
what is) the extent of market presence in the world's major
markets? How to build the necessary global presence? What
must be and (versus what is) the optimal locations around the
world for the various value chain activities? How to run global
presence into global competitive advantage?

2. A global strategy may be appropriate in industries where
firms are faced with strong pressures for cost reduction but with
weak pressures for local responsiveness. Therefore, it allows
these firms to sell a standardized product worldwide. However,
fixed costs (capital equipment) are substantial. Nevertheless,
these firms are able to take advantage of scale economies and
experience curve effects, because it is able to mass-produce a
standard product, which can be exported (providing that demand
is greater than the costs involved).
Global strategies require firms to tightly coordinate their
product and pricing strategies across international markets and
locations, and therefore firms that pursue a global strategy are
typically highly centralized.
Global strategy involves thinking in an integrated way about
all aspects of a business-its suppliers, production sites, markets,
and competition. It involves assessing every product or service
from the perspective of both domestic and international market
standards. It means embedding international perspectives in
product formulations at the point of design, not as
afterthoughts. It means meeting world standards even before
seeking world markets and being world class even in local
markets. It means deepening the company's understanding of
local and cultural differences in order to become truly global.
However I am going to take a case study of Coca cola Company,
its global business strategy and how it utilizes it to become
successful in the global market.
According to a report by United State Securities and Exchange
Commission (2006) the Coca-Cola Company was established in
Atlanta, Georgia, in the year 1886. The company is considered
to be the world number one non-alcoholic beverages company,
leading in manufacturing, marketing and distribution of its
product (concentrate and syrups). Concentrates and syrups are
being sold out to bottling companies for final dilutions and
packaging to consumers, Coca-Cola Company produces a wide
range of about 500 different beverage brands across the world.
In the late 1920’s the company begins its journey for

3. globalization and presently operating in more than 200
countries following a simple global formula “Provide a moment
of refreshment for a small amount of money – a million times a
day”.
The Coca-Cola Company together with the bottling companies
forms the best production and distribution system in the world,
the system is designed in such a way that employees dedicated
and put the company’s objectives as their number one priority.
Products of this company have proven to be the number one soft
drink in quenching consumer’s thirst of non-alcoholic soft
drinks from Moscow to Montreal and from Beijing to Boston all
over the world for more than 115 years of its existence. One of
the key objectives of the company is to increase its market
share-value, which was achieved by operating with associates
with the aim of satisfying customers and valuing customers’
interest as well as protecting company’s assets and minimizing
business risks. However Coca cola utilizes the following
business strategies.
Political changes in accordance with the ruling government,
changes that has to do with government regulations, majors and
policies as to how a company should operate and as to how the
products should also be. By setting up those rules and
regulations the government intervene with the company’s
decisions because the board have to make sure in every decision
that is being made those roles and regulations must in no
circumstance be violated, some of which includes monitory
policy, trade restriction, recruiting policy, environmental
policy.
However, aside from the FDA’s requirements other political
majors that are being set in accordance with the jurisdictions of
countries include income tax, import and export regulations and
the uncertainty of political crisis. Political crisis can be in form
of protest, which might affect the demand of products, as well
as political violence that makes it hard for the products to
penetrating in political crisis zones.
Economic factors, which companies uses in forecasting future

4. decisions on investment. These include interest rate, inflation,
standard of living, wages, exchange rate, unemployment rate
and the overall economic growth of the country. These
economic factors differs in each of the operating countries,
which is why before a company venture any country it has to
comprehensively analyzed the economy of the country
considering the upper mentioned factors.
Economic growth of a country gives a company a glimpse of
high purchasing-power; this is what most marketers use in
penetrating the market. Coca-Cola Company uses this tool to
market their product across the world, which brought about the
63 different types of currency being used by the company.
However, due to constant fluctuation on exchange rate strong or
weak currency are some of the determinants of exporting
product worldwide which is very important as the company
generate 72% of its operating profit outside the United State.
Furthermore, another major economical tool is the interest rate
imposed on borrowed money. Changes in interest rate affect the
financial status of a company and further investments as it
increase total cost, the Coca-Cola Company manage to cope
with interest rate fluctuation by implementing a derivative
instrument. In the case of inflation, the Coca-Cola Company
sorts their employees with higher wages and salaries in
countries with high inflation rate so as to enable them cope with
the situation. This increase in wages increase product cost and
couldn’t be reflected on the product price due to the competitive
and risk of the market, a threat being faced by external
environment in most companies.
The social factors have to do with people’s cultures, traditions,
health perception, safety majors, population growth and new
trends among the population. A company is not expected to
change the social factors but rather, to adapt and adjust to suit
these social factors.
This is a very important section as regards to a company like
Coca-Cola that has a direct link to the customers; companies of
this nature are considered to be B2C. Countries are diversify in

5. terms of culture and tradition, this element have to be
absolutely analyzed before introducing marketing and
introducing products. Coca-Cola Company has about 3300+
different products, in penetrating new market after intensive
market analysis the Company start by introducing few of their
products based on the social factors of the general population
subsequently increasing products based on social factors.
Technology plays several functions in beverages industry as
with the manufacturing new products, packaging product and
distribution of products.
Coca-Coca Company rely on its bottling partner for packaging,
83% of case volume produce across the world is being
manufactured by bottling partners which the company don’t
have total control power over. This is why it’s essential for the
company to keep a healthy relationship not just with its bottling
company but within and outside the entire departments
companies involved.
The availability of different Coca-Cola packaging has
everything to do with the advance in technology; various
vending machines are available all over the world. This led to
the production of some stylish non-refillable bottles and cans,
which are trending among youth and attractive to children
which also serves as a marketing tool for promoting products.
International Differentiation Strategy
Differentiation strategy is defined as a marketing technique
used by a manufacturer to establish a strong identity in a
specific market. It also may be referred to as segmentation
strategy. Using this strategy, a manufacturer will introduce
different varieties of the same basic product under the same
name into a particular product category and thus cover the range
of products available in that category. There are several ways a
firm can differentiate its’ products. We focused on two aspects
of this; branding and cost leadership.
International Diversification Strategy
“With a portfolio of more than 3,300 beverages, from diet and
regular sparkling beverages to still beverages such as 100

6. percent fruit juices and fruit drinks, waters, sports and energy
drinks, teas and coffees, and milk-and soy-based beverages, our
variety spans the globe.” (List, 2010). Sparkling beverages,
such as the brands Coca-Cola, diet Coca-Cola, Sprite and Fanta
are part of the traditional range of refreshment products offered
by Coca-Cola. Products in this category are an important
segment, offering consumers an enjoyable and satisfying
solution to maintain good hydration. This strategy has really
helped the company penetrate into the global market.
International Marketing Strategy
This section concentrates on marketing strategies in
international business and ways Coca-Cola has established these
strategies around the world. First, one must understand that
globalization has become a trend in response to nontariff trades
and the growth of elimination of barriers, which has helped the
marketing of international brands. International marketing
strategy can be defined in many ways. International marketing
strategy is the manner in which an organization performs based
on a predetermined set of activities in order to plan, promote,
price and distribute a good or service for a profit to consumers
in various locations (Cateora & Graham, 2007, p.9). Van
Mesdag also describes international marketing as a company
having a marketing strategy in different markets depending on
the market characteristics (Van Mesdag, 2000, p.75).
Coca-Cola’s strategy is noted to be “global.” This strategy is a
combination of both strategies previously described. By
attaining both qualities of each strategy, Coca-Cola enjoys of an
identifiable brand image as well as instilling local practices that
allows them to create and embrace cultural differences. Coca-
Cola prides itself not just for its distinguishable brand but for
its attentiveness to local markets’ needs.
Conclusion
We performed an in-depth review of how effective or
ineffective Coca-Cola was in implementing each of the six
strategies discussed in their operations in the United States,
China, Belarus, Peru, and Morocco. We have found that Coca-

7. Cola’s global brand’s success is accredited to its “think global,
act local” campaign. Most of their marketing strategies focus
specifically on local culture and customs. Localization is a key
element in the effectiveness of Coca-Cola’s international
strategy plan. We have also noted Coca-Cola’s performance
could be better when compared to other mid-sized companies.
REFERENCES
1. Albaum, G., &Tse, D. K. (2001, August). Adaptation of
international marketing strategy components, competitive
advantage, and firm performance.
2. Ahmad ElAmin (2007). “Coca-Cola reports progress in red
environmental impact” William Reed Business Media. United
State.
3. Brian Nordmann (2004) “Organizational Structure”