Coca-cola corporation analysis, 8-10 pages, 12 font Times New Roman, single space.

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6. Uhh.. where ya been?

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­­­­­­­­­­­­­­­­­­­­­­­­­ ACTUAL PROJECT STARTS HERE ­­­­­­­­­­­­­­­­­­­­­

1. CURRENT SITUATION ~~~

IMPORTANT NOTE: You can directly use (aka copy paste) Stage 1 material. Since we already worked on this part, please do “II. CORPORATE GOVERNANCE SECTION” as well

• Stage 1 NEEDS SERIOUS EDITING. It was rushed so make sure EVERYTHING is covered and information are correct, but yes feel free to use Stage 1 material

• This section just basically needs proofreading and adding some other stuff maybe

1. 1. ­ HISTORY

Coke (the actual fountain­drink) was invented in 1886 in Atlanta by a pharmacist named John Pemberton. Pemberton’s accountant, Frank Robinson, named the fountain drink after two of its ingredients: coca leaves and kola nuts. Hence, you now have what is known as the iconic fountain drink, Coca­Cola.

One of the main ingredient of Coca­Cola is coca leaves, which interestingly are also used in manufacturing the drug known as cocaine. During its early stages, the ingredient was found in the drink itself. However, it was ultimately extracted from the fountain­drink and become narcotic free. Under the Jones­Miller Act, cocaine imports are banned in the United States; however, The Coca­Cola Company and its lab, Stepan Company, are the only corporations exempted from the law. (Adams, 2011)

In 1891, Asa Candler, also a pharmacist, bought The Coca­Cola Company after the death of Pemberton. Although Pemberton invented the drink, Candler was the founder of The Coca­Cola Company Corporation. Within a four­year period, Coca­Cola's were distributed across the states, and by 1898, the fountain drink has also reached Mexico and Canada.

Due to the product’s immense popularity, John Biedenharn pioneered the bottling machinery, which made it possible for the beverage to be portable. Five years later, Candler had sold most of his US bottling rights to Benjamin Thomas and John Whitehead for $1, who then developed a bottler franchise over the next 20 years.

In 1916, Asa Candler retired from the business to become Atlanta’s mayor. Consequently, in 1919, he and his family sold the business to an Atlanta banker, Ernest Woodruff, for an estimated

$25 million. It was also in that same year that The Coca­Cola Company went public.

Fastforward to today, The Coca­Cola Company holds 48.6% of the carbonated soft drink market, which makes them the top leader in the industry. The company’s purpose remains to watch for undeveloped markets, embodied by growing middle class, who are willing to spend on non­alcoholic beverages. Currently, the company’s 2020 vision is “to create a long­term destination for [their] business and provides [them] with a “Roadmap” for winning together with [their] bottling partners.”

1. 1. ­ CURRENT PERFORMANCE

1. 1. 1. ­ RATIO ANALYSIS

Industry Name: Non­Alcoholic Beverage

The Coca­Cola Company (KO) Ratio Analysis: (Source: CSIMarket, GuruFocus, Form 10­k reports)

PepsiCo (PEP) Financial Ratio Analysis: (Source: CSIMarket, GuruFocus, Form 10­k reports)

1. 1. 1. ­ COMPETITOR ANALYSIS

Coca­Cola ratio analysis provides quantitative results that are superior to their biggest rival, Pepsi, which controls 30% of the market share. Throughout their financial statements, key matrices focusing on measuring a company’s financial position (liquidity, profitability, and leverage) show that Coca­Cola is growing at a faster pace than their competitors.

For instance, the profit margin ratio measures how effective and fast companies convert sales into net income; indirectly, it also shows how a company is managing their expenses. Coca­Cola is at 17% while Pepsi is a 9%. It is important to have a high profit margin and maintain low expenses to provide investors with a reassurance that their investment will be fruitful.

Another important metric is the return on investment (ROI). It is used as rudimentary device for measuring investment profitability. If an investment does not have a positive ratio or the investor sees opportunities with a higher ROI on similar companies, it will instruct them to choose the investment with the highest return rate. Coca­Cola ROI is 11.26% whereas Pepsi has an ROI of

1. 1. This data shows that investing on Coca­Cola provides the most return on your investment.

Furthermore, the asset turnover ratio calculates how efficient the company is using their assets in generating revenue, and how many sales are generated from each dollar of company asset.

Coca­Cola shows it makes 1.40 of revenue per dollar of asset while Pepsi generates .90 of revenue. This shows that Coke is better in using their resources more efficiently and cost effective.

The current ratio provides a measure of liquidity and the working capital it has to invest and the ability to pay short­term debt. It is measured by dividing current assets and current liabilities. In this case, Pepsi outperforms Coca­Cola with 131% compared to 124%. Although Pepsi has a higher percentage, Coke has the ability to generate revenue by investing and acquisition surpasses Pepsi. An example of Coke’s ability to invest is when it acquired Monster energy drink the initial investment was 3 billion USD and now worth 5 billion USD, which shows their ability to expand and continue their growing brand equity.

1. 1. 1. ­ INDUSTRY COMPARISON

Coca­Cola is positioned as the leader in the non­alcohol beverage industry. The industry is facing a decline in customer demand, mainly in North America and Europe. The decline in growth can be attributed to the adverse macroeconomic conditions such as health concerns among consumers about the side effect of sugar and synthetic additives. Consequently, the revenue trend in the beverage industry is at a decline.

In 2013, Coca­Cola’s revenue was $8.5 billion while in 2015, they earned $7.6 billion. On the other hand, Pepsi’s 2013 revenue was 6.7 billion USD and declined to $5.4 billion in 2015. It is evident that even when the market is down, Coca­Cola is able to maintain ownership of the industry. Conversely, the company’s profit margin maintains 12% ahead of the average, in their respective industry, meaning they are able to generate to most profit from their product.

Both companies perform the same in their utilization of their assets. The industry asset turnover rate is 0.89. Pepsi is right on par with 0.90 while Coca­Cola is at an impressive 1.40, the highest it has been in 5 years. They are able to use their assets in an efficient and profitable manner.

An area where Coke can improve is lowering down debt expense to improve their current ratio, which stands below the industry average of 127 percent. Pepsi is at 131 percent due to maintaining a low debt expense express in the balance sheet.

1. 1. ­ MISSION

As a leading beverage company, Coca­Cola aims to inspire passion, creativity, optimism, and fun through their mission statement ­ to refresh the world, to inspire moments of optimism and happiness, and to create value and make a difference (The Coca­Cola Company). With great social and corporate responsibilities, the company defines their values through leadership, collaboration, integrity, diversity, accountability, and quality. With their customers’ needs in mind, the Coca­Cola company not only strives for success, but their ultimate goal is to bring satisfaction and happiness to its customers.

According to their corporate website, the Coca­Cola company came up with this mission statement to define their purpose and values in hopes to inspire every member of its organization to unite and thrive as one. The company frames their vision in every aspect to train and encourage their people to bring out their best potential and sustain their brand value.

1. 1. ­ OBJECTIVES

Coca­Cola’s long­term objective is to maximize their market share over time and their long­term cash flow. On the basis of achieving the first two objectives, then it sets the goal further to ensure the most efficient production, distribution, and marketing chain.

Based on the current situation, Coca­Cola’s short­term objective is to maintain the leadership in non­alcohol beverage industry and to increase sales revenue in India by 20% from 2017­2020. Because Coca­Cola was accused of selling products with pesticide residue in India, they had negative publicity since September 2006 (Jonathan). Therefore, their current objective is to invert the Indian market and to generate positive brand reputation, specifically, to promote sales by 20% in the following three years.

1. 1. ­ STRATEGIC POSTURE

1. 1. 1. ­ CORPORATE STRATEGY

Corporate strategy is a key component to a firm’s survival and success. By definition, corporate strategy is primarily about the choice of direction for a firm as a whole and the management of its business or product portfolio. With this definition in mind, when we contemplate Coca­Cola’s mission, vision, and values, we can visualize the overall direction of the company.

From Coca­Cola’s first mission, to refresh the world, we can envision the future of the Coca­Cola Company. It is the focusing factor which leads Coca­Cola Company to be the world's dominant provider within the beverage industry as a company that offers energetic, convenient, yet affordable carbonated soft­drink.

We get a clearer picture as Coca­Cola’s vision serves as the framework for the corporate strategy, and guides every aspect of the company by characterizing important factors that need to be achieve to advance toward sustainability and growth. Coca­Cola’s vision total six Ps: People, Portfolio, Partners, Planet, Profit, and Productivity (The Coca­Cola Company).

• The first P in Coca­Cola’s vision is People, the company place great importance on the people working for the company from top­level management such as Board of Directors to part­time employees. By providing a suitable work environment, Coca­Cola people are stimulated to be self­actualize.

• The second P is Portfolio, Coca­Cola want to bring the world a portfolio of high quality beverages that refresh and satisfy the people’s needs.

• The third P is Partner, by developing and maintaining a close connection with suppliers and customers, we can collectively create lasting value.

• The next part of Coca­Cola’s vision is Planet, Coca­Cola wants to be a responsible company that make a difference by building and supporting sustainability.

• After Planet is Profit, as a public company Coca­Cola’s has to heed to the concerns of its shareholders while being conscious of its other visions and responsibilities.

• The last vision is Productivity, Coca­Cola envision an efficient, effective, and agile company.

Finally, Coca­Cola’s value aid as a guiding light on how the company should act and behave to better the communities and themselves. The characteristics of Coca­Cola’s value includes: leadership, collaboration, integrity, accountability, passion, diversity, and quality (The Coca­Cola Company). All these characteristics supports Coca­Cola’s focus on the market, the consumers, and the world. It also helps Coca­Cola to work smart, act with urgency, and be responsive to change. Additionally, it promotes Coca­Cola to act like owners and be the brand through accountability, passion, and quality.

1. 1. 1. 1. ­ DIRECTIONAL

In order to survive in a highly competitive industry, Coca­Cola must improve its competitive position by differentiating itself from the rest of it competitors and orienting toward growth. In 2014, Coca­Cola announced a five­point strategic action to lay the groundwork for reigniting growth and creating long­term value. The five­point strategic action from the Coca­Cola are:

1. We focused on driving revenue and profit growth

2. We invested in our brands and business

3. We become more efficient

4. We simplified our company

5. We refocused on our core business model

Coca­Cola serves over 200 nations, each playing a decisive role to drive sustainable revenue and profit growth. The underlying strategy, which Coca­Cola uses to fuel this sustainable growth, is to segment growth strategy by market type. In new and emerging markets, Coca­Cola’s core strategy is to increase volume, while keeping the price affordable. This will lay the groundwork and bolster the foundation for future success (The Coca­Cola Company).

In developing markets, the strategy is to balance between volume and pricing. In mature markets, there is more focus on pricing and profitability through more products such as smaller packages, glass bottle, and mix varieties . There are different strategies for different markets and different nations. By following through with the described strategy, Coca­Cola was able to drive revenue up in 2015. Globally, price and volume rose by 2 percent, which consequently increased revenue by 4 percent (The Coca­Cola Company).

Strong business needs to constantly invest. Coca­Cola’s strategy is to invest in better marketing, which will increase the quality and quantity of advertising of the brand. The latest marketing campaign, “Taste the Feeling”, by Coca­Cola was launched in 2016. It draws attention to the refreshing taste, uplifting, and personal connection, which all associate the enjoyment of a Coca­Cola. In a broader sense, Coca­Cola is also marketing the “on brand” campaign, letting consumers know that they can savor a variety of Coca­Cola product from calories to no calories and caffeinated to non­caffeinated.

At the same time, Coca­Cola is investing to expand their beverage portfolio by entering the several different categories of beverage. In partnership with Monster Beverage Corporation, Coca­Cola is entering the energy beverage category. Coca­Cola also invests in Suja, an organic juice beverage, and agrees to acquire China Green Culiangwang, a plant based protein beverage (The Coca­Cola Company).

Investing in more products and better marketing are just some steps Coca­Cola has taken to increase their flexibility in the market. To this end, they have strategized to become more efficient by increasing productivity while decreasing costs. They used a strategy called “zero­based work” to assume the company’s budget start at zero and all expenses must be

justified annually, not just carry­forward from the previous year. The result was $600 million increase in productivity in 2015 (The Coca­Cola Company).

Increased revenue, investments, and productivity all contributed to Coca­Cola’s being the leader in the beverage industry. However, evolving consumer preferences and innovation in technology have created an environment where speed and precisions are determining the winner in the marketplace. To capitalize on this concept, Coca­Cola has optimized its operating structure by removing some layers of management to create a direct communication from regional business units to headquarters. Most importantly, Coca­Cola has begun to further enhance the employee's experience with the objective of empowering the employees and creating a nurturing workplace, where curiosity, innovation, and growth are encouraged.

The final strategic action is Coca­Cola reorienting their prime competencies from bottling and distribution to marketing and franchise leadership. Their ultimately goal is to completely refranchise the bottling system and distribution to an independent status. According to Coca­Cola’s 2016 10­K annual report, the Bottling Investment segment contributed 15.1% of the company’s net operating revenue, however the profit margin was essentially zero, at .1% (The Coca­Cola Company). In order to streamline the bottling and distribution system while improving performance, Coca­Cola plan to reduce it bottlers to 3 percent by the year­end 2017.

1. 1. 1. 1. ­ PORTFOLIO ANALYSIS

Coca­ Cola’s portfolio is very diverse as it has many drinks ranging from juices to soy and added dairy drinks. The juice drinks make up for 38% of the share value, which is their highest investment that comes from Coca­ Cola products. Some of the major brands like Monster closed their partnership on June 12 and they transferred their non­energy drinks business to Coca­ Cola (Market Realist). Along with Monster, other product line such as natural mixers, sparkling water, and sparkling fruit beverages, were also transferred, which is good because Coca­ Cola will now have an extensive line of non­carbonated beverages.

Based on the BCG Matrix Analysis, the cash cow for the Coca­ Cola company is the original Coca­ Cola beverage because it is the foundation of the company and it has generated around

$44.3 billion in net operating revenue (SureDividend). “In Europe and Asian regions, Kinley is being sold while Dasani bottled water is targeting the US and UK market. Both of these business units are stars for the Coca­Cola Company as the rising need of bottled water opens up growth opportunities in the industry” (Estrel, 2015). Within Coca­ Cola’s diverse portfolio, Minute Maid seems to be the question marks of the company as it has not been sold as much as Coca­Cola beverage. “Even though in some regions Minute Maid has been able to obtain a generous sales volume of $ 1 billion, the brand has not been able to gain widespread popularity as the Coke” (Arnett, 2015). Minute Maid might finally take off in sales in the future as the recent years have been more focussed on being health conscious. Based on Statista, the portfolio distribution graph shows that the 1% of the category “Other” made up for the market share percentage and upon careful analysis on the Coca­ Cola company website, the brands that are categorized under “Other Products” are Core Power, Odwalla, and Zico. Based on their sales it does not seem like these brands are doing too well in bringing in much cash, therefore, they should be be either sold off or managed more carefully.

1. 1. 1. 1. ­ PARENTING STRATEGY

Corporate parenting/parenting strategy is a corporate strategy that focuses on utilizing the core competencies of the parent corporation (Coca­Cola in this case) in order to create value that would not normally be created without the relationship. Coca­Cola’s already in place top­down organizational structure, governance and ethics policies, and commitment to using sustainable resources and up to date processes whenever possible will foster superior performance from the company’s business units. This is mostly a matter of consistency and execution on Coca­Cola’s part.

The advertising market for Coca­Cola is an essential resource and capability for the company, given its established brand name and capital. In 2013, Coca­Cola was among the top­five largest advertisers in China. Obtaining a staggering 1.33% of the overall Chinese advertising market volume. Surpassing corporate giants such as PepsiCo, McDonald’s, Estée Lauder, China Mobile, and among that others as well. The advertising market measured things such as but not limited to: television, magazines, newspapers, radio, and outdoor advertising (e.g. billboards).

According to Buehler, the top 5 companies that Coca­Cola owns are: Monster Beverages, Fuze Beverages, Vitamin Water, Minute Maid, and the Bottlers Investment Group. (Buehler, 2016) In order for synergy to exist, it is necessary to provide needed resources, skills and capabilities, and coordination of activities of shared unit functions. Coca­Cola’s portfolio at a short glance seems to have a solid portfolio because of how related/similar each of the businesses are. Monster covers the energy drink market, Fuze and Vitamin Water on the healthy alternative market (?), Minute Maid in the juice market, and the Bottlers Investment Group covers the manufacturing aspect that is required for all the businesses. Because of how similar each of these businesses are, providing the necessary resources/etc. looks to be simple.

The economies of scope that are at play with Coca­Cola are the savings from the shared use of other facilities, labor, and other resources (such as Monster, Fuze, Minute Maid, Sprite, etc.) to make products in order to cut production costs.

1. 1. 1. ­ BUSINESS STRATEGY

Coca­Cola, a global brand that is leading in the beverage industry, offers soft drinks, fruit juices, sports drinks and other beverages. The company focuses on five strategic actions. The first strategy that they focused on is driving revenue and profit growth. They used segmented revenue growth strategies across the business that varies based on market type. By aligning employee incentives, increasing volume, keeping their beverages affordable, and strengthening their

foundation of their future success, they struck a balance between volume and pricing in developing markets. Coca­ Cola relies on improving profitability by offering small packages, premium packages (glass and aluminum bottles), and relies more on price/mix in developed markets.

Coca­Cola’s second strategy is to invest in their brands and business, which will improve their brand image. They increased spending on media advertising by over $250 million and invested across their expansive beverage portfolio.

Their third strategy is to become more efficient by investing in better marketing while increasing their financial flexibility. Their aim is to reduce costs in areas such as spending on non­media marketing while increasing efficiency.

The fourth strategy is to simplify their company by identifying areas where they can be faster, smarter, and more efficient. This was done by removing a layer of their functional management and connecting their regional business units directly to headquarters.

The company’s last strategy is to refocus on their core business model by concentrating on their core competency, which is their ability to lead the system of independent bottling partners while creating value for their retail and restaurant customers. They have acquired and managed several partners with an aim of improving performance, optimizing manufacturing and distribution systems, and refranchise the bottling territories back to independent status.

Porter’s Five Forces help analyze the company’s competition and position in the industry by identifying the bargaining power of the buyers and suppliers, threat of substitute products or services and new entrants and lastly, the rivalry among existing firms. Based on Dudovskiy, the threat of new entrants is insignificant because Coca­Cola is the leading global market of carbonated drinks, which is highly saturated; therefore, the new entrants cannot benefit from economies of scale.

There is also a lot of barrier in the industry to compete against Coca­Cola and Pepsi, because these companies have long established their brand. New entrants would need to spend billions on dollars to build their image. Therefore, Coca­ Cola’s position in the beverage industry is on very strong ground.

The bargaining power of buyers is fueled by the availability of great choice of cola beverages. According to an article, “the issue of Coca Cola addiction has surfaced in the media a number of times, addiction of Peter Lawrie, a professional golfer being a noteworthy example” (Wallop).

The bargaining power of suppliers varies, but since Coca­Cola has been only growing, the volume of investment on supplier diversity has been increasing since 2010 (Dudovskiy). Because sugar is one of the main commodities for Coca­ Cola and the price varies over time based on availability, suppliers do have some power.

The threat of substitute products that Coca­ Cola faces is the alternate use of coffee or other healthy drinks. Although Coca­ Cola has a wide portfolio, corporations like Starbucks could substitute the customer’s thirst for a cold beverage. According to Investopedia, as more people become health­conscious, the threat of a trend forming in which buyers substitute a different drink for Coca­Cola products becomes more of a possibility. Despite Coca­Cola being a globally leading brand in the non­alcoholic beverage market, investors need to be aware of the competitive landscape in the market.

The last force that Coca­ Cola can analyze to stabilize their position in the industry is the existing competitor, Pepsi, whose portfolio not only contains beverages, but also a wide variety of food. According to Investopedia, Pepsi owns Doritos, Quaker Oats, and Rice­A­Roni, so even if the trend goes against drinks, Pepsi can continue to thrive in the market. Furthermore, Coca­ Cola also competes with Dr. Pepper Snapple Group in the juice market. Critics warns that “As consumer trends shift, Coca­Cola could be left vulnerable, but the beverage company does have a loyal following. The risk in this area is moderate” (Investopedia).

1. 1. 1. ­ FUNCTIONAL STRATEGY

Marketing strategy

The Coca­Cola Company markets their brand value through building valuable connections with its customers. Coca­Cola dominates the market by creating valuable relationships with their customers, investing in infrastructure programs in developed markets, and differentiating its brand in new developing markets (The Coca­Cola Company).

Financial Strategy

Coca­Cola fulfills their financial responsibilities by maintaining their strong cash flow management to reduce debt, financial fees, interest rates. This strategy allows them to utilize free cash flows to fund other operations and investments, which increases the flexibility to raise their capital and maximize the firm’s financial value.

R&D Strategy

Research and development functional strategies are used to differentiate competitive advantages in terms of cost, innovation, availability, adaptability, sustainability, etc. The Coca­Cola Company approached this technique in 1985 to rearrange its original Coca­Cola drink formula with a sweeter taste (The Coca­Cola Company). Although this change in formula was strongly disapproved by their consumers, the company was able to classify the original formula as the best­selling classic due to its irreplaceable taste.

Operations Strategy

According to Coca­Cola’s company profile, their bottling operation investments for its domestic and foreign partners strengthened their bottlers’ production efficiency as well as increased their revenue and profits. By building strong and long­term relationships with bottling partners, Coca­Cola assisted them in improving their overall performances while simultaneously advancing their supply chain network (The Coca­Cola Company). This manufacturing method revolutionized their business activities by partnering with diverse organizations.

Purchasing Strategy

The company’s strategic procurement operates under the goal of supplier diversity. According to Coca­Cola’s website, they “believe that their supplier base should represent [their] diverse customer and consumer base.” (“Supplier Diversity”) The supply chain management of the company are managed by different major business partners or “prime suppliers”. Therefore, as part of their supplier diversity strategy, they “request prime suppliers to subcontract portion of their Coca­Cola contracts with minority and women business enterprises”. The goal of this strategy icreate long­term competitive advantage through a strong a community.

Logistics Strategy

Named as the “Coca­Cola System”, the company’s logistic strategy plays a significant role in their huge success. As mentioned in company’s 2020 vision, they aim to continuously create value and enrich their relationships with their bottling companies. The “Coca­Cola System” starts with the company itself, which produces the beverages’ bases. They then sells these bases to authorized bottlers to manufacture and distribute. Because of this system, Coca­Cola is able to operate and reach customers globally. In addition, the bottling companies work closely together with Coca­Cola to execute strategies to implement in different localities.

Human Resource Strategy

As reflected from the company’s six­point “P”s vision, the management of the Coca­Cola also places great importance in their People. They treat their employees as their most important asset. They take part in employee enrichment and make sure that they are satisfied through their various compensations and benefits.

Information Systems Strategy

According to Coca­Cola’s Vice President and Chief Information Officer, Ed Steineke, the IT and marketing sectors of the company operate in tandem. Coined as “revenue­generator CIO”, the information systems strategy of Coca­Cola “uses technology to cultivate direct relationships with customers and help develop a demand­driven supply chain.” (Levin, 2013) Because of the advent of the continuously evolving technology, the company is able to extend their customer reach. While the marketing department’s job is to build connection with consumers, the IT department simultaneously supports them by creating application platforms for social media sites such as MyCoke rewards. In addition, the IT department cultivates direct customer relationship by creating and packing content in social media sites to increase their impact beyond traditional advertising channels.

1. 1. ­ POLICIES

Unlike companies such as Walmart and Nordstrom, whose slogans are respectively "Always Low Prices" and "The Customer is Always Right”, which focus more on giving customer value, Coca­Cola's slogan, "Taste the Feeling" (2016) focuses on reconstructing the way consumers see carbonated drinks, which are typically seen as unhealthy due to its high amount of sugar and caffeine. Coca­Cola redirected its campaign towards healthy living lifestyle because of the resurgence of healthier living trends as of recent years. This strategy strongly mirrors their mission to create value for their customers.

Advertisements under Coca­Cola's new slogan focus on showing the consumer various high­emotion and encompassing relatable moments; where Coke, all 3 major varieties, Coca­Cola, Diet, Zero, and Life, are being enjoyed. To summarize the core message behind Coke's new campaign, CMO of Coca­Cola, Marcos De Quinto, says, "... showing how everyone can enjoy the specialness of an ice­cold Coca­Cola, with or without calories, with or without caffeine." (Heilpern, 2016)

The decision making policy and delegation power lie in the hands of the Board of Directors. According to Coca­Cola, the board of directors is a shareowner­elected group that oversees the long­term health, success, financial strength, and is the ultimate decision­making body of Coca­Cola. Along with these responsibilities, the Board is also involved in risk evaluation, implementation of strategy, and the appointing of members to senior management who are responsible for conducting business. (Corporate Governance, 2016) While the Board of Directors has the final say in most decisions, the management of corporate responsibility is shared with the Public Policy and Corporate Reputation council, which consists of senior managers from various parts of the company. Coca­Cola has also implemented a toll­free 24/7 line called EthicsLine where associates, partners, suppliers, and customers can explain their concerns regarding possible ethics issues, compliance issues, violations, etc. (Governance and Ethics, 2016)

1. 1. ­ ALIGNMENT

Coca­Cola’s mission strives “to bring moments of optimism and happiness” to their customers through the display of quality brands and actions, which is aligned with every stage of planning and decision making.

Coca­Cola’s primary corporate objectives are “to refresh the world and inspire moments of positivity”, which supports the company’s mission of utilizing the company’s strong brand image to create value and make a difference. Coca­Cola’s corporate strategy includes the following five actions:

1. Focusing on driving revenue and profit growth

2. Investing in Coca­Cola’s brands and business

3. Become more efficient

4. Simplify our company

5. Refocus on core business model

These actions help strengthen Coca­Cola’s corporate mission by further enforcing the company’s core model to not only increase the company's revenue, but also increase the work ethics of company employees and the satisfaction of customers. One of Coca­Cola’s functional strategy is the expansion of its Coca­Cola lineup with Diet Coke, Coke Zero, Cherry Coke, etc., By doing so, the company successfully increased its market share by enticing different groups of people such as those who are health conscious, which also helps Coca­Cola accomplish its company mission.

1. CORPORATE GOVERNANCE ~~~

1. 1. ­ BOARD OF DIRECTORS

   2. ­ TOP MANAGEMENT

1. EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (SWOT)

1. 1. ­ NATURAL PHYSICAL ENVIRONMENT: SUSTAINABILITY ISSUES(p.94) (PESTEL FRAMEWORK) ­ Kaylee

• Physical Resources

• Wildlife

• Climate

• Global Warming

• Externalities

• Pollution

1. 1. ­ SOCIETAL ENVIRONMENT (STEEP ANALYSIS: table 4­1) ­

1. 1. 1. ­ ECONOMIC

      2. ­ TECHNOLOGICAL

3.3.3 ­ POLITICAL­LEGAL

3.2.4 ­ SOCIO­CULTURAL

1. 1. TASK ENVIRONMENT ­

Understanding how Michael’s Five Forces of Competition affect the industry is essential in determining a company’s profitability and strategic positioning. It is important that the company is aware of how each force interacts with each other so that the company can carve out a position in the industry that will lead to a higher profitability and be less vulnerable to attack.

The Coca­Cola Company operates in the non­alcoholic beverage industry, in which the market is very saturated. In this situation, the only way a company can achieve growth is to take existing market share from competitors, increase consumer demand, or introduction of new products. Essentially, in order for Coca­Cola to continue to dominate the beverage market, they must continue to address the growing health­related consumer concerns and maintain healthy supplier relationships in order to remain relevant in the market.

1. 1. 1. ­ THREAT OF NEW ENTRANTS

New entrants or potential competitors in the market desire to obtain market share by leveraging prices and costs that will share the current market; therefore, “the threat of entry puts a cap on the profit potential of an industry.” (Porter, 1979) According to Porter, there are seven barriers to entry, which consist of supply­side economies of scale, demand­side economies benefit of scale, customer switching costs, capital requirements, incumbency advantages independent of size, unequal access to distribution channels, and restrictive government policy. Overall, The Coca­Cola Company carries all the advantages of the barriers to entries, thus making the threat of new entrants low for the company.

1. 1. 1. 1. Supply­side economies of scale

Due to the incumbents’ ability to produce larger volumes at relatively low costs, these economies bar entry to the market by forcing new entrants to enter in a large scale. The Coca­Cola Company especially benefits from this barrier advantage because they

own vast distribution network that operates in six continents. They also have several special licensing deals. For example, McDonald’s and Coca­Cola partnership have contributed a great deal to both companies. Particularly, the agreement states that only Coca­Cola products must be served to all McDonald’s restaurants while in return, Coca­Cola sales team cannot sell its syrup to another restaurant for a lesser price than what McDonald’s pay them. (Gelles, 2014). Special licensing deals affect new entrants by a great deal by limiting their opportunities to distribution.

1. 1. 1. 1. Demand­side economies benefit of scale

These benefits arise from the company’s “popularity” in the market. Often, a buyer’s willingness to pay for a product is influenced by the number of other buyers who patronize the same product. According to analysts, “Coca­Cola is seen not only as a beverage, but also as a brand.” (“Porter’s Five Forces in Action”) One of Coca­Cola’s main competitive advantage is their brand recognition. Because Coca­Cola has built their strong reputation among consumer since 1886, new entrants will have a difficult time building a loyal customer base.

1. 1. 1. 1. Customer switching cost

Customer switching cost occurs from the fixed costs that buyers encounters when they switch suppliers. For Coca­Cola buyers, there are relatively low to no consumer switching costs. Other similar brands to Coca­Cola such as Pepsi are often priced either the same amount or a few cents difference.

1. 1. 1. 1. Capital requirements

Porter states that because “major corporations have the financial resources to invade almost any industry, the huge capital requirements in certain fields limit the pool of likely entrants.” (Porter, 1979) The Coca­Cola Company is known for their high cash flow management. Therefore, Coca­Cola’s free cash flow can deter new entrants by making investments or through research and development to develop new products.

1. 1. 1. 1. Incumbency advantages independent of size

Incumbency advantages may include “proprietary technology, preferential access to the best raw materials sources, preemption of the most favorable geographic locations, established brand identities, or cumulative experience that has allowed incumbents to learn how to produce more efficiently.” (Porter 1979) As stated, Coca­Cola has built a

strong foundation in distribution, brand identity, and supplier relationships since 1886. These established foundations and relationships deters new entrants by limiting their capital resources.

1. 1. 1. 1. Unequal access to distribution channels

Dubbed as the “Coca­Cola System”, TCCC main competitive advantage is their distribution network. Their global distribution network gives them access to a wide range of customers. Because Coca­Cola is already highly established in the market, new entrants may face high costs in displacing older brands in the grocery shelves as well as promotions.

1. 1. 1. 1. Restrictive government policy

The most urgent issue that the beverage industry currently faces is the imposing of taxes on sugary drinks and soft drinks on certain cities in across the United States. The policy arises from the growing health concerns regarding the amount of caffeine and sugar on soda beverages. With the growing popularity of the sugar tax policy, new entrants are deterred; however, the policy greatly affects the Coca­Cola Company as well in terms of substitutes, which will be discussed in the later sections.

1. 1. 1. ­ BARGAINING POWER OF SUPPLIERS

According to Porter, “powerful suppliers capture more of the value for themselves by charging higher prices, limiting quality or services, or shifting costs to industry players.” (Porter, 1979) It is important to note that The Coca­Cola Company does not actually directly sell finished products to consumers. Rather, the company sells their beverage bases, concentrates and syrups to their authorized, independent bottling partners who oversees manufacturing and distributing the finished product to consumers.

One of the main ingredients for Coca­Cola concentrates is water. While the company does not face significant difficulties in their water supply, they practice sustainability of natural resources through their CSR program, Water Stewardship, which aims to reduce water by recycling wastewater and provide sanitation to the communities that they serve.

The next main ingredients are high fracture corn syrup, sucrose, aspartame, which are used as the principal sweetener for the bases. The Company has reported that they generally do not encounter or anticipate difficulties in obtaining these ingredients. (“Coca­Cola’s Suppliers Performance”) in regards to their juice products, particularly orange juices, the company mainly outsource their ingredients from companies in Florida and the Southern Hemisphere. Even though Florida is often subjected to weather conditions that could potentially result to higher prices and shortages of oranges, Coca­Cola is still able to meet their requirements through purchasing from the suppliers in the Southern Hemisphere.

Porter states that the power of suppliers are strong if they meet the following characteristics:

1. 1. 1. 1. Supplier industry is more concentrate than the industry it sells to

Most of Coca­Cola ingredients come from natural resources or are readily available from various resources across the world. Water, corn syrups, and sugar industries are not as concentrated as the beverage industry. Therefore, suppliers do not pose significant threat to the company in terms of ingredient shortages or higher prices.

1. 1. 1. 1. “The supplier group does not depend heavily on the industry for its revenues”

Because the Coca­Cola ingredients generally are found naturally and have many uses besides making beverages, suppliers may have a leveraging power since they do not have to depend on one industry to make revenues.

1. 1. 1. 1. “Industry participants face switching costs in changing suppliers”

In general, the Coca­Cola faces low switching costs in changing suppliers. This is because many of the ingredients to make their concentrates are abundant and can be obtained naturally. However, raw materials such as the oranges, if affected by unforeseen weather conditions like in Florida, may incur higher prices for the company. In addition, switching cost could also be higher due to shipping routes. For example, if the new supplier is farther from the production location, higher shipping costs and longer routes can significantly drive costs.

1. 1. 1. 1. “Suppliers offer products that are differentiated”

Most of the raw materials that Coca­Cola needs are not uncommon as they are extracted naturally. Therefore, their suppliers typically do not offer products that are differentiated.

1. 1. 1. 1. “There is no substitute for what the supplier group provides”

As stated, Coca­Cola ingredients mostly stem from natural resources. Therefore, there are no substitutes for natural ingredients. However, the beverage industries are getting more criticism from using unnatural ingredients such as aspartame, which indicates that the Company needs to value their suppliers as there no other healthier substitutes besides the natural ingredients.

1. 1. 1. 1. “The supplier group can credibly threaten to integrate forward into the industry”

The basic raw materials that Coca­Cola uses such as water, corn syrups, and sucrose are also being used in many industries such as food. Furthermore, these suppliers generally does not depend solely on the beverage industry to make revenue. Therefore, supplier integration to the industry is low.

In essence, the bargaining power of suppliers to the Company are moderate. Even though the threat is medium, Coca­Cola still needs to maintain healthy relationships with its suppliers to avoid incurring high costs.

1. 1. 1. ­ THREAT OF SUBSTITUTE PRODUCTS OR SERVICES

Currently, the most burning issue that Coca­Cola faces is the growing popularity of healthier alternatives. The issue arises from the growing concerns of health institutions who argues that sugary and soft drinks contribute to the alarming health issues such as obesity and diabetes. In fact, according to Stivaros, “the market for soda has been declining in the last decade, because people are slowly shifting to a healthier lifestyle as obesity and diabetes crisis worsen in the world.” (2016) This trend makes the threat of substitute significantly high for Coca­Cola.

Generally healthier alternatives to soda include water (sparkling, fruit infused), tea, juices, and coffee. While Coca­Cola is currently working on expanding their brand portfolio by acquiring brands such as Zico’s coconut water, Dunking Donuts Ready to Drink Coffee, and Honest Tea, these brands are not their staple products. The company still generate their revenue from their main Coca­Cola line of products.

Porter states that the threat to substitutes are high if the following characteristic is met:

1. 1. 1. 1. “Substitute offers an attractive price­performance trade­off to the industry’s product”

Substitutes such as water and tea greatly offers price­performance trade­off to Coca­Cola soft drinks. For instance, water typically comes in a pack of 24 bottles of 16.9 fl oz, which costs around $5 to $6 per bottle. On the other hand, a case of Coca­Cola comes in a pack of 24 cans of 12 fl. oz that costs around $9, which translates to $0.37 per can.

At a glance, water is cheaper and provides healthier effects than Coca­Cola products. Water can also be used in many ways to provide the same refreshment as soft drinks, such as fruit­infused water and flavored sparkling water. Notably, they are easier to make at home and easily accessible to consumers.

Due to the relatively lower prices of substitutes and increasing health concerns, the threat of substitutes is significantly high.

1. 1. 1. ­ BARGAINING POWER OF BUYERS

According to Porter, buyers “can capture more value by forcing down prices, demanding better quality or more service (thereby driving up costs), and generally playing industry participants off against one another, all at the expense of industry profitability.” There are two main groups of buyers who can influence bargaining power: buyer with leveraging power and buyers who are price sensitive

Buyers have a higher negotiating leverage if:

1. 1. 1. 1. “There are few buyers, or each one purchases in volumes that are large relative to the size of a single vendor”

Not only are the numbers Coca­Cola buyers are huge, these buyers also purchase in bulk. For instance, the main customers of Coca­Cola include “large international chains of retailers, restaurants, and small independent business.” (“Supplier and Customer Relationships”) Because these businesses typically experience a large and continuous influx of their customers, they buy in bulk to prevent stock outs.

1. 1. 1. 1. “The industry’s products are standardized or undifferentiated”

Carbonated and still beverages, in their own essence, are very standardized; therefore, there are many equivalent products to Coca­Cola. For this reason, buyers often play brands against another without suffering from high switching costs. Particularly, Coca­Cola’s main competition is Pepsi.

1. 1. 1. 1. “Buyers can credibly threaten to integrate backward and produce the industry’s product themselves if vendors are too profitable”

For Coca­Cola, this characteristic is low as carbonated beverages are not easy and cheap to produce at home.

On the other hand, buyer groups are price sensitive if :

1. The industry’s product has little effect on the buyer’s other costs.

The price of carbonated and still beverages, no matter which brand, are relatively around the same price; therefore, Coca­Cola products presents only a small fraction of both their customers and consumers.

1. “The quality of buyers’ products or services is little affected by the industry’s product”

As stated, the beverage industry is very standardized; therefore, the quality of the every product the beverage industry are relatively the same.

1. “The buyer group earns low profits, is strapped for cash, or is otherwise under pressure to trim its purchasing costs”

One of the main alternatives of sodas and juices is water. Because the water is lower than sodas and juices, consumers may often cut their purchasing costs by buying cheaper alternatives.

In summary, Coca­Cola’s intermediate and end­user customers buying power are relative low to moderate. Because the beverage industry is very saturated, all the products in the industry are priced closely to each other, which gives buyers many opportunities to choose from different brand. However, what drives this buyer threat down is Coca­Cola’s brand. The company has built a strong base of loyal consumers that no other existing competitors can beat. Therefore, in their minds, Coca­Cola is not only a beverage, but a brand that is embedded in their lifestyle.

1. 1. 1. ­ RIVALRY AMONG EXISTING FIRMS

Porter states that “The degree to which rivalry drives down an industry’s profit potential depends, first, on the intensity with which companies compete and, second, on the basis on which they compete.” (Porter, 1979) PepsiCo is Coca­Cola’s main rivalry in the beverage market; however, Pepsi has more diversity in their product portfolio because they also produce food brands such as FritoLay and Quakers. Based on Statista 2016’s market share report of leading beverage companies worldwide, Coca­Cola strongly stands at 48.6%, PepsiCo at 20.5%, and other companies combined at 30.9% (“Market Share of Carbonated Beverages Worldwide as of 2015”). Because there are many competitors in the industry, the prices relatively lie around the same amount. Furthermore, the beverage industry is at its maturity stage in the product lifecycle. As a result, the industry growth is slow which drives up the intensity of competition to fight for market share. However, when consumer trends continue to shift, Coca­Cola is vulnerable; however, one cannot deny that the Coca­Cola brand has loyal consumer base. (Butler, 2015)

1. 1. 1. ­ THE 6TH FORCE

The sixth force is called “The Relative Power of Other Stakeholders”. According to Thomas Wheelen and David Hunger, the other stakeholders that businesses must consider are “governments, local communities, creditors, trade association, unions, special­interest group, shareholders, and complementors.” Specifically, to Coca­Cola, the main sixth force that affects the company is the government,

As stated previously, there is an increasing popularity of supporters of the sugar tax in the United States due to the rising health concerns related to obesity and diabetes For example, voters in Berkeley, California passed the soda tax in 2014. Reports have shown that “consumption of sugary drinks fell by 21% in the Berkeley neighborhoods ... and residents have reported drinking more water, a sign that they were replacing sugar­sweetened beverages with something healthier.” (Sanger­Katz, 2016) However, reports also state that two other cities, who imposed the sugar tax, have seen soda consumption rise 4%. Analysts have attributed these opposing reports to consumers leaving sugar­tax­imposed cities to go to another city to evade tax. These differing reports show that government policies may have low to moderate effects. However, large scale imposition of tax will definitely have greater effects to the company as more buyers will switch to cheaper and healthier alternatives.

3.4 ­ EFAS TABLE ­

1. INTERNAL ENVIRONMENT: STRENGTHS AND WEAKNESSES (SWOT)

**IMPORTANT NOTE: There are mini subsections that you may have to cover for some that are not included here (This has the main stuff only) So, please check the powerpoint for the SUBTOPICS. Specifically, all of section 4.7

1. 1. ­ CORE COMPETENCIES

   2. ­ VRIO ANALYSIS **WEEK 4*

   3. ­ BUSINESS MODEL

   4. ­ VALUE CHAIN

   5. ­ CORPORATE STRUCTURE

   6. ­ CORPORATE CULTURE

   7. ­ CORPORATE RESOURCES **see note above

1. 1. 1. ­ MARKETING

      2. ­ FINANCE

      3. ­ RESEARCH AND DEVELOPMENT

1. 1. 1. ­ HUMAN RESOURCES

      2. ­ INFORMATION SYSTEMS

1. 1. ­ IFAS TABLE

1. ANALYSIS OF STRATEGIC FACTORS (SWOT)

**IMPORTANT NOTE: Refer to powerpoint for SFAS TABLE Guidelines.

1. 1. ­ SITUATION ANALYSIS (SFAS TABLE)

   2. ­ REVIEW OF MISSION AND OBJECTIVES

1. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY

1. 1. ­ TOWS MATRIX

   2. ­ STRATEGIC ALTERNATIVES

1. 1. 1. ­ PROS AND CONS

1. 1. ­ RECOMMENDED STRATEGY

6.3 Recommended Strategy.

Strategic management of a multinational company with a wide variety of product lines, in this case Coca-Cola Company, revolves around the management’s ability to cohesively seam the various units of the firm to achieve set targets. To fully comprehend the success the Coca-Cola Co. has enjoyed over past years, an in-depth evaluation of the strategies employed at different levels of the company: corporate, business, and functional. These strategies reveal the ingenious aptitude of the organization in maximizing their strength points while promptly removing weak approaches or redesigning.

6.3.1 Corporate-Level Strategies.

Corporate-level strategies defines the direction of Coca-Cola Co. through formulation of approaches at the top most level, decisions made affect the entirety of the organization. The decisions made direct the other sub-divisions of the company, acting as a guideline for every resolution concerning product lines, company culture, and maximizing profitability. Since the turn of the decade, Coca-Cola has had to align their corporate level strategies to suit their orientation towards growth and maintaining their niche within the global market. Furthermore, Coca-Cola involvement in the non-alcoholic beverage industry necessitates the firm to continuously evaluate their products folio in accordance to the trends observed in the market, as is discussed later. Decisions made in relation to resource allocation for every unit of the company is also guided by the strategies implemented by the top management, who evaluate the capabilities of every product lines and business units to nurture further success of the whole firm (Purce, 2014).

Coca-Cola Growth Strategies:

Coca-Cola’s directional approach towards growth are aimed at ensuring the overall statistics of the company concerning revenue, assets and consumer market niche continue to increase in every financial year. The adaptation of this strategy has had to take note of the firm’s greatest competitor: Pepsi Company, and other minor firms depending on each and every country to analyze the viability of any proposed project. For instance, the CEO of the company identified the firm’s aggressive growth approach in expansion projects in all the six operating plants the company has in different parts of the world. As at the end of the 2015 financial year, the firm had cemented their presence in over 200 countries across the globe. The nature of growth adopted in different regions is often decided after extensive research by the company to analyze the opportunities that would generate the best returns.

A prime example of the firm’s implementation of corporate-level strategy can be displayed by the firm’s need to curtail the unnecessary long process of product movement to reach their consumers. Coca-Cola production of beverages such their juice drinks, soda, and bottled water followed a distribution chain from the manufacturing plant to distributors, then to retailers before the consumers can access the products. This long chain was identified as roadblock to the firm’s ability to maximize revenue, thus a vertical integration of the company’s services was redesigned to place the company products closer to the consumers. This was implemented through increased investment in distribution companies and direct point of sales of the company products by the company.

Invariably, the firm continues to employ horizontal growth strategies when the aim is to introduce a new variable from the target of a new project. For instance, if the Coca-Cola decides to target a new segment of the consumer market, introduce new product line or procure geographical presence in a country, the process involves both increase in product sales and asset acquisition. This is often done through mergers or an acquisition of a growing firm which is then expanded to meet the management’s targets. In 2013, Coca-Cola finalized their acquisition of Zico, which displayed the company’s resolve to continuously grow and increase the worth of the company. The company has always maintained an external outlook towards their growth plans i.e. instead of using funds in expanding, they would rather go for strategic alliances such as merging and acquisition to penetrate a new market.

Diversification Strategies:

Rumelt (2012) identifies the role played by a diversification approach to a firm’s products, when a firm is facing reduction in sales from current products or to take advantage of current trends among the consumers. Considering the nature of the beverage industry, Coca-Cola has to contend with the innovative characteristics of products in this line of business. Combination of different ingredients often lead to new drinks that could increase company revenue or improvement on current drinks to meet the satisfaction expected by consumers when they buy a Coca-Cola drink. To implement this strategy, a cursory look at the different drinks manufactured by the company, aggregate to nearly 400 different flavors across the world. The most common drinks include the Coca-Cola, Fanta, bottled water and Sprite. This diversification amplifies the variety of choice to the consumer while allowing the company to earn revenue from various product lines (Coca-Cola Company, 2017).

The essence of diversification at the corporate level is in the ability of the company to engage in various distinct business operations under a single umbrella. The management will analyze the prospects for new ventures that can earn the company additional income and continue to grow over the key competitors. Roscoe explains this phenomenon as the economics of freedom, that by encouraging non-intervention from other parties, the market will always find a stable position which equally satisfies the needs of everybody. Comprehension of this equilibrium point in the market marks the start point of strategizing the best allocative efficiency of available resources (Roscoe, 2014). In 2015, when the company faced a lot negative publicity with accusation of some drinks are unhealthy to the consumers, the company implemented this strategy to great perfection by introduction of new product lines that gratified consumer’s want for healthy drinks. The company introduced the Diet Coke, which was advertised as the zero-carbs drink, without necessarily losing the taste of the Coke brand (Purce, 2014).

Retrenchment and Stability Strategies:

These strategies refer to the approaches adopted by Coca-Cola towards business units or product lines that are not necessarily earning the expected revenues, or the figures concerning profitability are constant. In such situations where the profits are neither increasing nor decreasing, Coca-Cola maintains an approach of stability i.e. maintaining stability. Though this approach has been termed to be timid or cautious, it guarantees the firm predictability and avoidance of risks that would be associated with change of strategy. On the other hand, the retrenchment strategies are applied to products or units that have continuously made losses or unable to recover the cost of investment in the particular market.

Coca-Cola implemented the above strategy in Lithuania by withdrawing from the country due to the inability of the company to realize profits within the expected period. Central to the losses made in Lithuania was the small market size of the country. The manufacturing plant in the country was closed, showing the no nonsense approach of the management towards any branch continuously posting losses. However, this does not mean the company ignores evaluation of opportunities that can enable successful turnaround of units that are making losses. Often before the retrenchment, the management will initialize a research study to unearth the reasons for the decline in profits, only when the problem is too critical for a turnaround, will the board authorize the closure.

6.3.2 Business-Level Strategies:

These strategies compound the approaches adopted at the unit level of a sub-division of the whole firm. Under these strategies, the need of specification to the applicable unit is formulated with adherence to the strategies set at the corporate level. Due to diversity of products offered under the umbrella of Coca-Cola Company, these strategies are implemented in accordance to uniqueness of the environment under which the strategic business unit operates. For instance, the strategies that would be adopted to increase sales in the Asian market differ from those in Africa. This represents the ability of the management to suitably market the company products under different situations while still maintain the going concern of the firm.

Competitive Strategies.

The competitive strategies employed in every unit of business under Coca-Cola relies on the need to lower costs of production, and a product differentiation that offers uniqueness of the company’s products to consumers. Coca-Cola’s major competitor in the non-alcoholic beverages industry across the world is Pepsi Co., has managed to create a positive environment of competition where the two companies push the boundaries to becoming the biggest brand in the world. For instance, in attempt to maximize on sales, the two companies have a contractual agreement with their distributors and retailers to solely associate with either of the company, never both. The competitive strategies involve other strategies that uniquely place the company in a positive light with consumers while continuing to give the company a low cost of production as is explained under the other strategies below.

Resource Allocation Strategies:

Collis and Montgomery article on Resource-Based view explains the strategies through which business firms can employ on company resources to reap the maximum benefit and competitive advantage over key rivals. The ability to create a uniqueness in the utilization of any resource offers an upper hand Coca-Cola over their rivals. The uniqueness will prohibit any attempts of imitation, creating a monopoly-like environment that will enhance productivity (Collis & Montgomery, 2008). The conception of this idea can be traced back to Roscoe’s economic model that identifies self-interest as a common goal for any individual. From time immemorial, any individual will engage in an economic activity with an aim to realize personal interests, which in equal measure, explains the motivation to create inimitability in the usage of resources under the RBV.

The implementation of this strategy in the various production units of Coca-Cola is one of the key reasons for the success of the company since its inception. The seriousness of the implementation is such that the formula for making Coke is rumored to be known by only two people in the world, who also have never met or travel together. Additionally, Coca-Cola has continued to differentiate the key ingredients in the manufacture of the products that identifies the uniqueness from other products, such as Pepsi.

Low-Cost Leadership Strategies:

The analysis of Coca-Cola to identify the relationship of the firm to cost leadership approaches reveals the need to always gain competitive advantage over key rivals by minimizing on costs incurred in every operational process. Key to the implementation of a low-cost leadership strategy is the continued ability of Coca-Cola to produce drinks of the same quality. This denotes the need to always deliver top quality products from every business unit while still managing to oversee the expenditure incurred to go over tolerable estimates. Successful implementation will lead to acute reduction in costs of production which creates a sense of competitive advantage over key competitors while still supporting the wealth-maximization goals of the stakeholders of the company.

Since inception, Coca-Cola has always created the requisite environment which prioritizes the efficiency of the manufacturing plants at a combination of resources which create the least possible cost of production. The efficiency in these plants is created by use of standardization mechanics to similar products. For instance, the packaging technology applied in the manufacture of drinks is totally automated at each and every plant. Marketing of Coca-Cola products at the global level or country level is also done comprehensively of all company products, which reduces the marketing costs that would have been incurred if every product was marketed individually. Coca Cola has majorly profited from the automation of some parts of the production process by enabling the company to save on labor expenses.

Focus Strategies:

Coca-Cola utilizes this strategy in two dimensions that enables the company to concentrate the efforts of each business into a specific area to maximize on benefits. As the name suggests, it offers ‘focus’ or single-mindedness towards the identified target. The first approach is towards cost-focus which is implemented through identification of a select market, after which all efforts are put to maximizing revenue earned from the select group (Purce, 2014). In the implementation, assumption is made that this particular niche will provide the best possible returns, and all the other available options are excluded from the execution plan. The competitive advantage acquired from this strategy is the ability to create a market niche where there are no major competing firms, or the rigorous focus exceeds the effort of the competitor too much. In the scenario of Coca-Cola Co., the company has managed to create a niche within the market through their most popular drink: Coca Cola. The company has infiltrated markets across the world but the company continues to differentiate the content depending on every market.

The second approach under focus strategies employed by Coca-Cola Co. is referred to as the differentiation focus where the company targets a particular segment of the market as in the cost-focus, but with a little variation. The focus is placed on the variable identified, however the firm differentiates its product from the other products in the market. For instance, Coca-Cola’s presence in the non-beverage industry is in the same manner, the company has managed to create a differentiation of their products from the other competitors. Definitely, the taste of Coca-Cola products differs in taste from the other drinks offered by companies such as Pepsi.

6.3.3 Functional-Level Strategies:

The essence of the strategies at this level is to preside over the day-to-day activities that contribute to the overall sustainability of the organization in the long-run. Though the discretion of these strategies is the concern of the managers and supervisors at the bottom of the chain of management, there is need to ensure the strategies formulated are in accordance to the corporate and business-level strategies. The distinct characteristic of function-level strategies is that they are essentially determined by the business-unit level strategy that the functional unit belongs. Coca-Cola Company has various departments under the firm’s management which necessarily dictate the nature of function-level strategies adopted.

Marketing Strategies:

The Marketing and Sales department of Coca-Cola is tasked with the implementation of the marketing strategies that are associated with selling and distribution of Coca-Cola beverages. The essence of marketing strategies is to expand the consumer market for company products or create new ideas for which the company products can be retailed. Over the years, Coca-Cola has avoided specificity in targeting any given segment of the consumer markets, instead they focus on marketing their products as a one-for-all drink. For this reason, Coca-Cola is one of the most popular and recognizable brands across the globe, liked by the young and old, rich and poor.

Currently, Coca-Cola have introduced a new worldwide campaign that aims to unite all the firm’s brands to create an equality discernment and strengthen brand awareness. The introduction of the Diet Coke continues to cement this approach, by presenting the company’s commitment to customer need satisfaction irrespective of the age or lifestyle. In this campaign, the company has adopted the line, “Taste the Feeling” to reference Coca-Cola’s drinks taste and invigorating power.

Financial Strategies:

The financial decisions concerning the means of upholding the corporate and business-level strategies often decided upon by the Finance and Accounting Department constitute the fundamentals of financial strategies. The aim of financial strategies are to cement the financial power or raise net worth of the company. The best illustration of Coca-Cola’s approach to financing projects is built around principles that guide the decisions to avoid dipping into financial crisis. When looking for finances for new projects, the company’s first option is from the firm’s subsidiary Coca-Cola HBC Finance B.V that has maintained the right for first option in investment opportunities. This approach is deviated from when only the countries of interest has laws and regulations that prohibit this tactic. Also, some mergers and acquisitions insert clauses that deny the financing subsidiary full investment control.

The landscape of the global markets defined by different currencies that carry varying value/worth in different countries also dictates the need for Coca-Cola Co. to have in place a strategies to counter the risks of the volatile currency markets. This idea allows Coca-Cola Co. to hedge against currency risk in the event that the value of any currency falls at any one time before the financial year ends. To counter this, Coca-Cola uses the firm’s own Global Commercial Paper to base their unit measurement when financing projects or appraising annual performance.

Research and Development Strategies:

Invariably, the key to success in an industry punctuated with ever-evolving tastes in drinks is the prerequisite for the company to inject millions of dollars into research and new products to gain a competitive advantage over key rivals’ products. Every now and then, Coca-Cola’s efforts are realized through the introduction of new drinks that seek to improve on previous versions or take advantage of new trends. To maximize on R&D strategies, the company has opened up six research centers that look to improve on industry standards by encouraging entrepreneurial spirits and supporting unique innovations. This department is also responsible for fostering new designs in the packaging of Coca-Cola products to identify the consumer market.

Operations Strategies:

Operations strategies are the approaches employed in the affiliation with other suppliers, resource management and the processes involving the manufacturing of each and every Coca-Cola drink. The strategies that Coca-Cola has recently applied to their operations is to reduce the bureaucracy tardiness affecting the swiftness of implementing decisions made by the management. These various functional layers that have to approve a decision before it is implemented affects the company negatively when favorable prospects present themselves. The major downside to the relieving of given levels in the hierarchy is the loss of jobs. This decision is considered to be inconsiderate from the firm’s management in the public eye, though considered to promote the profitability aims of stakeholders in the company.

Purchasing Strategies:

The Supply and Purchases department formulates the engagement guidelines when procuring raw materials or ingredients used in the manufacture of drinks and other materials necessary in the smooth running of the whole organization. The importance of this strategy trumps other business-units due to the cost implications of raw materials in the overall cost of production. Additionally, the beverage manufacturing industry incorporates a value chain that affects the environment, which under new global environment stipulations requires multinationals to promote environment friendly policies among their stakeholders. Coca-Cola employees are also required to uphold a certain code of ethics when dealing with suppliers and purchases management (Menon & Yao, 2017).

Human Resource Management (HRM) Strategies:

The composition of staff is decided under this category, with emphasis placed on cost implications and assessment of performance levels of the employees. The perfect balance between skilled and low-skilled employees is considered such that every process in all business units are filled with capable candidates. The company has also managed to cultivate a retention program that allows best-performing employees to be rewarded and retained to maintain the competitive advantage over their rivals.

The internal workforce environment within the firm can be abridged to denote the basic organizational behavior that the company practices in relation to employee engagement. This is an important area that the top management of Coca-Cola seeks to create a diverse workforce that can represent the global nature of the firm. Though the company was established and has its main headquarters in America, it has managed to open various branches across the globe. Instead of seeking for expatriates from their headquarters to oversee such branches, the company employs local labor to enable the residents to identify with the company. In this aspect, it has managed to create a strong organizational behavior, which has improved employee retention as well as the satisfaction they derive from their responsibilities. This also helps the company to gain a larger percentage of the local markets as the managers of the branches can better identify the needs of local clients to help increase sales (Menon & Yao, 2017).

Information Technology Strategies:

The continuous changes that continue to punctuate the information technologies sector requires modern corporations to have in place a suitable tactics to integrate the appropriate systems to gain competitive advantage. Information systems provide one of the crucial complimentary services in any organization, from the production processes to client engagement. For this reason, the implementation process when a firm decides to adopt or change their information systems software involves testing phase and supplementary evaluation of the firm’s migration readiness.

Social media presence is another vital aspect in information systems due to popularity of social sites with large segment of the consumer market. Social media has seen an explosive growth in the last few years. It’s had an important role in marketing, and communication for consumers, and businesses alike. Social media marketing is expected to become the “next generation” of marketing and consumer engagement. It is proven, that if used correctly, it has the capacity to increase a Coca-Cola’s ability to generate leads, and convert sales. Coca-Cola’s Chief Information’s Officer has also continuously noted the importance the company associates with the security of their systems to show commitment to privacy and confidentiality.

6.3.4 Policies.

The formulation of the strategies discussed above require a policy guidelines document that designates the tactics used during the implementation process. The principle used in articulating the policies is that the guidelines should adequately define the parameters to be used in any decision-making or creation of an action plan.

Coca-Cola Co. policy involving strategy implementation requires the gratification of the following guidelines:

• The viability of a new project should be first substantiated before embarking on any action plans.

• The resource allocation required should not be detrimental to the accomplishment of other business units.

1. IMPLEMENTATION

1. 1. ­ IMPLEMENTATION PROGRAM

   2. ­ WHAT MUST BE DONE

7.2.1 ­ PROGRAMS ACTIVITIES

7.2.1 ­ ACTION STEPS

1. 1. 1. ­ WHO IMPLEMENTS STRATEGY

      2. ­ MATRIX OF CHANGE

1. 1. ­ ORGANIZING FOR ACTION

1. 1. 1. ­ CORPORATE STRUCTURE

      2. ­ JOB CREATION

1. 1. ­ ACTION PLAN

1. EVALUATION AND CONTROL

1. 1. ­ MEASURING PERFORMANCE

   2. ­ BALANCED SCORECARD

1. 1. 1. ­ FINANCIAL

      2. ­ CUSTOMER

      3. ­ INTERNAL BUSINESS PROCESS

      4. ­ LEARNING AND GROWTH

1. APPENDIX (ALL)

1. WORKS CITED (ALL!!)

**You’re responsible for your OWN citations/APA FORMAT/ ALPHABETICAL ORDER PLEASE**

A B

Butler. R. (2015). Analyzing Porter;s 5 Forces on Coca­Cola. Investopedia.

Retrieved From http://www.investopedia.com/articles/markets/120915/analyzing­porters­5­forces­cocacol a.asp

“Coca­Cola’s Suppliers Performance”. CSI Market. Retrieved from http://csimarket.com/stocks/suppliers_glance.php?code=KO

D E F G

Gelles, D. (2014). Coke and McDonald’s, Growing Together Since 1955. The New York Times. Retrieved from https://www.nytimes.com/2014/05/16/business/coke­and­mcdonalds­working­hand­in­ hand­since­1955.html

H I J

K L M

“Market Share of Carbonated Beverages Worldwide as of 2015”. Statista.

Retrieved from https://www.statista.com/statistics/387318/market­share­of­leading­carbonated­beverage­ companies­worldwide/

N O P

Porter, M. (2008). The Five Competitive Forces That Shape Strategy. Harvard Business Review, January Issue, 79­93.

Q R S

Sanger­Katz, M. (2015). More Evidence that Soda Taxes Cut Soda Drinking. The New York Times. Retrieved from https://www.nytimes.com/2016/08/25/upshot/more­evidence­that­soda­taxes­cut­soda­dri nking.html

“Suppliers and Customer Relationship”. The Coca­Cola Company. Retrieved from http://www.coca­colacompany.com/our­company/workplace­overview/suppliers/supplier

­and­customer­partnerships

Stivaros, C. (2016). Fizzling Out, IBISWorld. Web. 13 October 2016

T U V

“Porter’s Five Forces in Action: Sample Analysis of Coca­Cola”. Valuation Academy.

Retrieved from http://valuationacademy.com/porters­five­forces­in­action­sample­analysis­of­coc a­cola/

W X Y Z

Well, fun.