strategic management university of karachi KUBS ABDUL BASIT KHATIR basitkhatir@gmail.com

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Strategic Management
Submitted to: Sir Shameel Ahmed Zubairi
BUSINESS PLAN
Coca ColaCompany
Submitted By: Abdul Basit (02)

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COCA COLA BUSINESS PLAN
CASE ABSTRUCT
Coca-Cola is a comprehensive strategic management case that includes the company’s year-end 2010 financial
statements, organizational chart, competitor information and more. The case time setting is the year 2011.
Sufficient internal and external data are provided to enable students to evaluate current strategies and recommend
a three-year strategic plan for the company. Headquartered in Atlanta, Georgia, Coke’s common stock is publicly
traded under the ticker symbol KO.
Coca-Cola is the world's largest nonalcoholic beverage company, owning four of the top five soft-drink brands
(Coca-Cola, Diet Coke, Fanta, and Sprite). Founded in 1886 by Atlanta pharmacist John Pemberton, Coca-Cola
brands today include Minute Maid, Powerade, and Dasani water. In North America the company sells Groupe
Danone's Evian and also sells brands owned by rival Dr Pepper Snapple Group (Crush, Dr Pepper, and
Schweppes)outside Australia, Europe,and North America.Coca-Cola today produces or licenses more than 3,500
drinks for sale in 200-plus countries.
In late 2010, Coca-Cola Company bought out its leading bottler, Coca-Cola Enterprises (CCE), and renamed
it Coca-Cola RefreshmentsUSA. The company continues to buy out its bottlers worldwide. Some of Coca-Cola’s
$15 billion brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade,Minute Maid,
Simply and Georgia. Coca-Cola is the No. 1 provider of sparkling beverages, juices and juice drinks and ready-
to-drink teas and coffees. Through the world's largest beverage distribution system, consumers in more than 200
countries enjoy the company's beverages at a rate of 1.7 billion servings a day.
Vision Statement (proposed)
To maintain our status as the number one beverage company in the world.
Mission Statement (proposed)
At Coca Cola we aspire to stay the world’s (3) leader focused on producing and selling superior quality
(7) carbonated beverages in the soft drink industry (2). We strive to treat our employees (9), customers
(1), and our communities with respect (8). We also seek to provide healthy financial rewards to our
shareholders and business partners (5) by using the latest technology (4) and hiring the most skill
employees. We always use ethical practices that assist in displaying Coca Cola’s public image as being
trustworthy, loyal, and honest (6).
1. Customers
2. Products or services
3. Markets
4. Technology
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees

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INDUSTRY ANALYSIS
Coke is the world’s #1 nonalcoholic beverage company. The Coca -Cola Company (TCCC)
owns four of the top five soft drink brands (Coca -Cola, Diet Coke, Fanta, and Sprite). Its
other top brands include Minute Maid, Powerade, and Dasani water.
Soft drinks belong to the non-alcoholic beverage industry. Depending on the region, they are
also known as soda, pop, or carbonated beverages, and cover drinks containing water, sugar
or a type of artificia l sweetener, and a flavoring agent. These fizzy drinks are mostly availa ble
in regular and diet varieties.
Multinationa l companies competing in the soft drink market are comprised of THE COCA-
COLA COMPANY, Pe psi-Co. Inc. and DR PEPPER SNAPPLE, to name a few. In the
beverage segment, The Coca-Cola Company and PepsiCo have been bitter rivals for ages.
PepsiCo always has to face the so-called ’Pepsi challenge’ as competing with Coca -Cola.
The ‘Pepsi challenge’ origina lly took place as a taste test. Consumers were invited to try
beverages out of two blank cups – one containing Pepsi Cola and one containing Coca -Cola.
Consumers were then asked to evaluate the taste of these two beverages and to decide
which one they would prefer. The blind tests let most Americans surprising ly learn that
they would prefer Pepsi Cola over Coca-Cola, based on exclusive taste.
PEPSICO, INC. is based in Purchase, NY, United States and was founded in 1965. Their
beverage product portfolio comprises soft drinks, bottled water, fruit juices, iced tea and
ready-to-drink coffee beverages. Pepsi-Cola, Mountain Dew, and Aquafina are some of
their best-selling global brands.

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Consumers, public health officials and government officials are becoming increasingly concerned about the public
health consequences associated with obesity, particularly among young people. In addition, some researchers,
health advocates and dietary guidelines are encouraging consumers to reduce consumption of sugar-sweetened
beverages,including those sweetened with HFCS or other nutritive sweeteners. Increasing public concern about
these issues; possible new taxes and governmental regulations concerning the marketing, labeling or availability
of the Company’s beverages; and negative publicity resulting from actual or threatened legal actions against the
Company or other companies in the industry relating to the marketing, labeling or sale of sugar-sweetened
beverages may reduce demand for our beverages, which could affect the Coca Cola Company’s profitability.
MARKET ANALYSIS
External Audit
Opportunities
1. Customers currently prefer favored soft drinks over colas such as Powerade,Sprite, and Fanta.
2. Flavored teas,and bottled water are expected to grow 24 percent and 9 percent respectively.
3. Customers are becoming more health minded in their food and drink choices.
4. Brazil, India, and Eastern Europe should offer good long term opportunities.
5. China's food and beverage consumption is forecasted to increase by 54.1% by 2014.
6. 25% of Americans eat fast food everyday.
7. Energy drinks hold 62% of the functional beverages market.
8. Coconut water is becoming a popular alternative to sports drinks such as Gatorade and Powerade.
9. Weaker US Dollar.
Threats
1. High commodity prices in sugar and tin.
2. Soft drinks are considered discretionary products and don’t perform well in poorer economic times.
3. Increased concern in health and wellness among consumers.
4. Sales are slower in the winter months as the business is seasonal.
5. Retailers are consolidating reducing the number of companies and increasing their bargaining
power.
6. Pepsihas a large food stuff business along with beverages.
7. Store brand and private label products still have great appeal among cost conscious customers.
8. Governments are looking to tax sugary drinks.
Internal Audit
Strengths
1. Coke is the largest manufacturer, distributer and marketer of nonalcoholic beverage concentrates
and syrups in the world.
2. New “micro-dosing” technology to dispense over 120 beverages from one machine.

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3. Produced over 400 brads consisting over 3,000 beverage products including, water,juice, sports
drinks, energy drinks, soft drinks, and others.
4. Products are sold in over 200 countries and people consume 1.4 billion Coke product servings every
day.
5. Net income increased from $6.8 billion in 2009 to $11.8 billion in 2010.
6. Coke’s Coca-Cola, Diet Coke, Fanta, and Sprite comprise 4 of the top 5 soft drink brands In the
world.
7. Coke has 5 water brands and just acquired Apollinaris and Traficante two European companies.
8. Coke Zero has yielded double-digit volume growth for four consecutive years.
9. Coke employees half the people of Pepsi, yet has higher net income.
Weaknesses
1. Coke continues to struggle in Europe as a whole; experiencing zero percent growth in 2010.
2. Coke continues to struggle in North America experiencing zero percent growth since 2009.
3. Coke is focused solely on the beverage business.
4. 45% of sales and revenue rely solely on Coca Cola and Diet Coke.
5. Inventory turnover is 6.7 while Pepsiis 9.0 and the industry average is 7.5.
6. Goodwill increased from $4 billion to over $11 billion in 2010 with Coke’s recent bottling
acquisitions and goodwill and intangibles accounts for 87% of all equity.
COMPETATIVE ANALYSIS
The Company competes in the nonalcoholic beverages segment of the commercial beverages industry. The
nonalcoholic beverages segment of the commercial beverages industry is highly competitive, consisting of
numerous companies. These include companies that, like Coca Cola, compete in multiple geographic areas, as
well as firms that are primarily regional or local in operation. Competitive products include numerous
nonalcoholic sparkling beverages; various water products, including packaged, flavored and enhanced waters;
juices and nectars; fruit drinks and dilatable (including syrups and powdered drinks); coffees and teas; energy and
sports and other performance-enhancing drinks; dairy-based drinks; functional beverages; and various other
nonalcoholic beverages. These competitive beverages are sold to consumers in both ready-to-drink and other than
ready-to-drink form. In many of the countries in which Coca Cola does business, including the United States,
PepsiCo, Inc., is one of their primary competitors. Other significant competitors include, but are not limited to,
Nestlé’s, Dr Pepper Snapple Group, Inc., Groupe Danone, Kraft Foods Inc. and Unilever.
Coca Cola’s competitive strengths include leading brands with a high level of consumer acceptance; a worldwide
network of bottlers and distributors of Company products; sophisticated marketing capabilities; and a talented
group of dedicated associates. Their competitive challenges include strong competition in all geographic regions
and, in many countries, a concentrated retail sector with powerful buyers able to freely choose among Company
products, products of competitive beverage suppliers and individual retailers’ own store or private label beverage
brands.
Five Forces analysis of The Coca-Cola Company in relationship to its Coca-Cola brand.

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Threat of New Entrants/Potential Competitors: Medium Pressure
 Entry barriers are relatively low for the beverage industry: there is no consumer switching cost and zero
capital requirement. There is an increasing amount of new brands appearing in the market with similar
prices than Coke products
 Coca-Cola is seen not only as a beverage but also as a brand. It has held a very significant market share
for a long time and loyal customers are not very likely to try a new brand.
Threat of Substitute Products: Medium to High pressure
 There are many kinds of energy drink s/soda/juice products in the market. Coca-cola doesn’t really have
an entirely unique flavor. In a blind taste test,people can’t tell the difference between Coca-Cola and
Pepsi.
The Bargaining Power of Buyers: Low pressure
 The individual buyer no pressure on Coca-Cola
 Large retailers, like Wal-Mart, have bargaining power because of the large order quantity, but the
bargaining power is lessened because of the end consumer brand loyalty.
The Bargaining Power of Suppliers: Low pressure
 The main ingredients for soft drink include carbonated water,phosphoric acid, sweetener,and caffeine.
The suppliers are not concentrated or differentiated.
 Coca-Cola is likely a large, or the largest customer of any of these suppliers.
Rivalry Among Existing Firms: High Pressure
 Currently, the main competitor is Pepsiwhich also has a wide range of beverage products under its
brand. Both Coca-Cola and Pepsi are the predominant carbonated beverages and committed heavily to
sponsoring outdoor events and activities.

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 There are other soda brands in the market that become popular, like Dr. Pepper,because of their unique
flavors. These other brands have failed to reach the success that Pepsior Coke
FINANCIAL ANALYSIS

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PROPOSE STRATEGY
 Generic Strategies:
The main generic strategy used by Coca Cola is that of cost leadership. This is a strategy employed by several
big brands of the world that are leading in the market. Cost leadership is a very effective strategy that helps
brands quickly increase market share and gain popularity. Everyone wants to spend less on any product.
Especially, the middle class which forms a very large part of Coca Cola’s customer base loves low prices of
products. Coca Cola has kept the prices of its products low. These are affordable products and available easily in
every corner of the world. Coca Cola has ensured both affordability and accessibility which has led to both
higher sales and popularity. This has proved to be a source of sustainable competitive advantage for Coca Cola.
From time to time, Coca Cola also uses discounts and promotional campaigns to increase sales and popularity. It
is mainly for the affordability of its products however, that the sales of the brand and its products have remained
high. Thus, the benefits of cost leadership are clear. It helps achieve higher sales, build a large customer base
and also gain recognition. Coca Cola spends a lot on marketing and promotion but still if its products’ prices
were not as affordable, its sales would have been lower. While cost leadership is the main generic strategy sued
by Coca Cola, it has also used differentiation to gain an advantage over the competitors. It has introduced a
number of healthy products including health drinks and juices that are aimed at the health conscious customers.
So, Coca Cola has sued a mix of cost leadership and differentiation to gain competitive advantage and to build
customer loyalty.
 Intensive Strategy
 Market penetration:
This is the strategy of selling more to the existing customer base. It is one of the key strategies Coca Cola has
used to grow its sales. Apart from keeping prices affordably low, the brand also uses promotional tactics like
seasonaldiscounts to push sales among its existing customers. It releases new packages and runs promotional
campaigns that are aimed at increasing the sales of its products worldwide.
 Market development:
This is the strategy of entering new markets or regions and selling to new customers. It is another key strategy
that has helped Coca Cola become a global brand. Coca Cola products are sold in more than 200 countries. The
brand has spread globally to nearly every corner of the world. Apart from the flavor of the coca cola products
and there affordable rices, the credit also goes to the use of marketing and promotions for international growth.
The strategy has been highly effective and helped Coca Cola grab the leadership position in the beverages
industry.

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 Product development:
Product development is the strategy of bringing more products to the market to increase sales and revenue.
Overtime, the product array of Coca Cola has grown quite broad. Its large product portfolio is made up of 500
sparkling and still brands and it serves nearly 3900 beverage choices. Now, there are 21 billion dollar brands in
its portfolio. In this way, Coca Cola has achieved a lot of growth through product development.
This was a discussion of the generic and intensive strategies that Coca Cola has used to grow its brand and earn
a competitive advantage. It is the leading brand in the beverages industry and this position has been achieved
with the help of a sustainable competitive advantage. Its global growth story is a testimony of its use of generic
and intensive strategies.