THE RED BECOMING MORE THICKER Presented by: DAIPAYAN DUTTA
COCA COLA ENTERS INDIA• Coca Cola entered the Indian market in 26th October,1993 after a gap of 16 years.• It acquired ownership in the Parle Group which gave the Company instant ownership to popular brands :Thumps Up, Goldspot, Limca, Maaza.• The deal not only gave manufacturing, bottling, and distribution assets to coke but also strong consumer preference.• Jayadev Raja, the flamboyant management expert , was made the first CEO of Coca cola in India.• With access to 53 of Parle’s plants and a well set bottling network, an excellent base for rapid introduction of the Company’s International brands was formed.
WHAT WENT WRONG• The style of professional management didn’t matched with the local bottlers as Coke was not able to capitalise the popularity of Thumps Up.• The company changed its CEO four times during the span of 7years.• The slow pace of work in erstwhile Parle group proved to be• Many bottling plants were small in size and were using obsolete technology and used low grade trucks for the transportation purpose by the bottlers.• Raja was replaced by Jack Nicholas in 1995 and he tried to acquire equity stakes in the Bottling plants.• The plan back fired as the plants already running on low profits decided to join Pepsi Inc
• Coke failed to capitalise on being the official drink of World Cup 1996 as Pepsi brought the tag ”Nothing Official About It”.• Nicholas was replaced by Donald short, who invested heavily in acquiring 38 bottlers for $700 million .• In next few months coke tripled its ad spending and moved to decentralize the style of working.• Each bottling plant was expected to meet predetermined profit, market shares and sales volumes.• The approach didn’t bring the expected results and Coke brought in Alexander Von Behr.
• Alexander Von Behr reitered coke’s commitment to decentralisation and responsiveness.• Coca Cola India was divided into six regions each under a business head.• This move brought resentment among employees resulting in many of them leaving the Company.• But undeterred Coke continued its reforms by Cost cutting in the form of shifting its executives from Farm houses to smaller houses and renegotiating leasing agreements in the Gurgaon Plant.• Discount rates were standardised and information system upgraded.• Coke had great hopes in India as the country with a huge population and the per capita consumption just 4 bottles a year.
Why did Coke change its CEOs so often?• The demand of the organisation changed soon after sometime and the current CEO failed at achieving the revenue targets or not giving his full commitment to the work or did not show his interest in the organisation• CEOs were doing rapid changes to the organisation but they did not look for the employees interest which effected the workers output and resulted in loss of productivity• Nicholas after entering the organisation gave ultimatum to the bottlers either to sell their firms ,resulting in bottling plants changing their loyalty to Pepsi.• Coca Cola Company tried to get results immediately but was not possible due to the complexity of problems.
What other changes might be necessary to make Coke’s operation profitable in India• To help the bottlers overcome their financial problems and increase profit margins• Improve relations with the bottlers to so that able to do their work with full commitment and provide better services to the company.• Launch more products in different categories to increase customer base.• Promote established brands like Thumpsup and Limca to gain more market share compared to Pepsi.• Motivate their employees and bring them in sync with Company goals
Do you think Coke should continue to stay in India? Why?• Coke had great hopes in India as the country has a huge population and the per capita consumption was just 4 bottles a year.•
• In India, the Coca-Cola system comprises of a wholly owned subsidiary of The Coca-Cola Company namely Coca-Cola India Pvt Ltd• Company-owned bottling entity, namely, Hindustan Coca-Cola Beverages Pvt Ltd• The Coca-Cola Company has invested nearly USD 1.1 billion in its operations in India since its re-entry back into India in 1992.• Coca-Cola system in India directly employs over 25,000 people and indirectly about 1,50,000 people in related industries through its vast procurement, supply and distribution system.