MGT 599: Case Study 2
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MGT 599: Strategic Management
Case Study #2
Joseph Wineman
Trident University International
MGT 599: Case Study 2
2
Executive Summary
This document serves as an in-depth strategic analysis of the Coca Cola Company. The
Coca Cola Beverage Company is the leading beverage manufacturer on the planet. It owns and
operates over 32 principal beverage concentrates and syrup plants throughout the world (The
Coca-Cola Company, 2011) and generates revenues in excess of $25 billion a year.
While its position in the beverage market is strong, it is susceptible to forces from industry,
social and cultural changes. I have conducted both an internal and external analysis of the Coca
Cola Company in order to gauge the company’s potential performance and identify strategies
that the company can use to navigate its way through changing times and trends in the soft drink
market. To do this, I have performed the following:
A- Porters Five Forces Model
B- PEST analysis
C- SWOT analysis
Introduction
Coca Cola is the world’s largest and most valuable beverage company. It produces over
500 sparkling and still brands ranging from Diet Coke, to Powerade, to Minute Maid (The CocaCola Company, 2011) and distributes them across 200 countries around the world. Thanks to the
development of the world's largest beverage distribution system, people consume Coca Cola
beverages at a rate of 1.9 billion servings per day (The Coca-Cola Company, 2011). The
adoption of a successful marketing strategy, which is one of the company’s tenant values, has
turned Coca-Cola into the world’s 4th most valuable brand, creating a total worth of $179.9
Billion and $45.91 Billion in sales. (Forbes, 2015)
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Porter's Five Force Model for Coca Cola
Porter's Five Forces Model attempts to analyze the level of competition within an
industry and then use that analysis to develop business strategies. It draws upon industrial
organization economics to derive five forces that determine the competitive intensity and overall
profitability of an industry (Porter, 2008).
Threat of New Entrants: Low Pressure
The barriers to entry into the soft drink market are minimal due to the relatively low cost
of production. Raw materials are readily available, cheap to purchase, and easily mass produced.
Additionally, the cost of consumer switching in the soft drink industry is close to zero. As a
result, new products, and new production companies, are constantly being introduced onto the
market. However, in order for one of these upstart companies to attain the levels of success of
Coca Cola, they would have to invest a considerable amount of resources on Research &
Development to develop a good recipe. They would also have to expend an enormous amount of
money in advertising in order to generate enough interest in their new product to overcome
customer brand loyalty; which is very strong in the soft drink industry.
Threat of Substitute Products: High pressure
Coca Cola enjoys a huge advantage concerning its global popularity status and inspires
fierce customer loyalty to its brand. Despite the fact that Pepsi tends to be Coke in blind taste
tests, Coca Cola continues to outsell its closest competitor as Coke and Diet Coke are the two
best-selling beverages on the Market (dividend.com, 2015). With that in mind, however, there
are a wide range of alternative products available in lieu of Coca Cola that are similar in both
taste and price point, making the threat of substitution very high.
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The Bargaining Power of Buyers: High pressure
In the land of soft drinks, the customer is king. Customer choice can effect marketing
areas and revenue spending. Recent trends in purchasing illustrate a decline in soft drink sales as
more and more customers become health conscious and look for alternatives to support their new
lifestyle. The shift in sales has a direct impact on a company’s performance and can force
bottled beverage companies to adjust corporate strategies, reducing the production of some
drinks, increasing the production of others, and completely eliminating poor sellers.
The Bargaining Power of Suppliers: Low pressure
Soft drinks are composed of inexpensive and readily available ingredients like carbonated
water, corn syrup and artificial sweetener, phosphoric acid and caffeine. Because these raw
materials are so easily obtained, and are purchased in bulk quantities, suppliers have little to no
bargaining power. Suppliers cannot afford to lose a huge customer like Coca-Cola.
Rivalry Among Existing Firms: High Pressure
PepsiCo is Coca Cola’s chief competitor in the soft drink industry. The beverage industry
is an oligopoly, meaning that a large majority of the market is controlled by a very small number
of firms. This means that price wars between the two companies does not benefit them in any
way, rather, it hurts them. Instead, they benefit from huge economies of scale and invest large
quantities of money into advertising campaigns to push their respective brands to increase
competition. Each company attempts to differentiate itself from their competitors by targeting
different markets. PepsiCo targets younger generations and likes to stand behind its blind taste
test winnings. Coca Cola markets itself globally as the ‘original’ soft drink and bases its
reputation on a secret formula that can be imitated, but never duplicated, making it ‘the real
thing’.
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PEST Analysis
PEST Analysis is a widely used tool that helps analyze the Political, Economic, SocioCultural, and Technological changes in a business environment. This helps a company better
understand the big picture forces of change that it is being exposed to. Companies can then
utilize this tool to identify threats and opportunities that are present. Threats can include
deregulation that can lead to intensified competition; a shrinking market; or increases to interest
rates, which can cause problems if a company is burdened by debt (mindtools.com, 2016).
Political Analysis
Political analysis is conducted with regards to the current and potential influences that
can affect a company. The United States beverage industry falls under the jurisdiction of the
Food and Drug Administration (FDA), which the government uses to provide oversight and sets
controls and regulations for the manufacturing of these products. The government can level fines
against Coca Cola if it fails to comply with federal and state regulations. Additionally, any
changes in environmental, safety, or labor laws can have a great impact on Coca Cola’s
manufacturing facilities with regards to factory emissions, waste water, and OSHA compliance.
Tariffs on exported goods can also play a factor. If taxes and required minimum wages are too
high, it can lead to the relocation of Coca Cola’s manufacturing facilities to countries with a
more favorable political climate.
Economic Analysis
Economic analysis examines the impact of local, national and international economies on
company performance by analyzing factors like interest rates, economic growth, international
exchange rates and inflation. Economic changes can have a huge impact on Coca Cola’s market
share; higher interest rates and inflation increase cost and provokes higher wage demands from
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employees. This deters company and shareholder investment, forces the company to keep more
real cash on hand and slows company growth. A poor economy drives down the demand for a
product, which forces companies to lower prices in order to move product as people are less
likely to spend money on unnecessary name brand items and will replace them with cheaper,
generic alternatives. A thriving economy encourages companies to stop hoarding money and
start investing back into itself by funding Research and Development into new products and
facilities with the hopes of taking a bigger slice of the market share. Thriving economies aboard
have enabled Coca Cola to expand their drink portfolio and compensate for slower economic
growth in the United States.
Sociological Analysis
Sociological analysis deals with the impact of changes in social trends on company
performance. Coca Cola is currently experiencing a decline in sales of their flagship product due
to changes in attitudes and lifestyles amongst most modern day Americans. Americans are
becoming more and more health conscious, and choosing to live healthier lifestyles. This
includes beverage choices. Carbonated drinks have been labeled unhealthy, and demand is
decreasing as a result. Coca Cola must respond by changing the mix of its portfolio, increasing
production of its diet and healthier beverages like Diet Coke, Minute Maid and PowerAde while
decreasing production of its original Coca Cola Classic beverage.
Technological Analysis
Technological Analysis deals with the impact of new technology and processes on the
company’s bottom line. It aids in the development of new products, improves manufacturing
efficiency, and reduces man-hours, which, in turn, reduces productions costs and improves
product quality. This can also include improvements in marketing technology as well. The rise of
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the internet, and the world’s total dependency on it, has created new forums for Coca Cola to
advertise its product to potential customers across the globe. Internet marketing is far cheaper
than traditional marketing over radio, print and television, and far more comprehensive.
SWOT Analysis of Coca Cola Company
SWOT Analysis is a technique for understanding a company’s Strengths and
Weaknesses, and for identifying both the Opportunities open to an organization and the Threats
that it faces. Strengths and weaknesses are often internal to an organization, while opportunities
and threats generally relate to external factors. Used in a business context, it helps carve a
sustainable niche in the market. SWOT is particularly useful because it helps a company uncover
opportunities that can be exploited for quick wins. Additionally, by understanding the
weaknesses of a business, it can manage and eliminate threats that would otherwise catch an
organization off guard (mindtools, n.d.). By utilizing the SWOT framework, a business can craft
a strategy that helps distinguish itself from its competitors.
Strengths
The Coca Cola brand is one of the most recognizable labels in the world and is currently
ranked by Forbes as the 4th most valuable brand on Earth, creating a total worth of $179.9 Billion
and $45.91 Billion in sales. (Forbes, 2015). The design and appearance of Coke’s brand has
changed very little over its 125 year existence, although numerous famous artists have given the
buying public their own take on the iconic image. Research has shown that babies recognize
brands at anywhere from 6 to 18 months, specifically requesting them by age three. Coca Cola is
among the top five brands that toddlers know best along with Cheerios, Disney, McDonald’s,
and Barbie (Blanding, 2010).
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Coca Cola has the largest beverage distribution system in the world and operates over 32
beverage production facilities in over 200 countries. Coca Cola’s corporate headquarters based in
Atlanta, Georgia, provides oversight of the branding, marketing and new product development,
but has delegated the production and bottling of its product to the bottling companies within its
distribution system. These bottling plants are considered their own separate legal entities (Berry,
2010).
Weaknesses
Coca Cola has a limited mix of products, focusing purely on beverages. Their chief
industry rival is PepsiCo which has a much broader portfolio of products that include snack
foods and restaurants such as Taco Bell, Long John Silver’s, and Kentucky Fried Chicken. As a
result, PepsiCo has a larger annual sales revenue of $65 billion vs. Coca-Cola's $48 billion (Wei,
2013). To combat this trend, Coca Cola has attempted to secure as many exclusivity contracts
with fast food companies as possible. However, they have not been able to corner the market as
restaurants like Panera and Bojangles continue to serve Pepsi products at their restaurants.
Americans are becoming more and more health conscious. Especially as more studies and
articles are written regarding the rise of childhood obesity. This has driven customer preferences
away from carbonated, sugary beverages and towards healthier alternatives like juices, sports
drinks, and diet sodas. Coca Cola does have diet drinks and juices in their portfolio. However,
their diet drinks contain an artificial sweetener called aspartame, which has been shown to cause
cancer in lab rats when ingested in large doses. Coca Cola also uses artificial coloring, which has
also been linked to chromosomal damage and thyroid cancer, (Michaels, 2013).
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Opportunities
Health conscious Americans are more than just a challenge for Coca Cola. They can be
viewed as an opportunity as well. Coca Cola can capitalize on the public’s preference for lower
sugar and all natural products by developing new products and acquiring healthier drink
alternatives. Coca Cola has developed a better alternative to aspartame called Truvia, which has
no known negative side effects. Coca Cola also acquired Minute Maid, Capri Sun, and Honest
Tea in an attempt to expand their beverage portfolio to sell healthier, lower calorie, alternatives
to the American public.
Threats
America’s new found health obsession has threatened to impact Coca Cola’s bottom line.
In the past, the company had exclusivity deals with school districts to have vending machines
placed in school cafeterias and hallways, giving children unlimited access to their sugary drinks.
The company has received a lot of bad publicity for their marketing towards children. In fact,
Coca Cola has been compared to cigarette companies for projecting an image that it is okay to
consume their products when their products not only have no real nutritional value but could be
hazardous to health in regards to weight, teeth and even may cause osteoporosis from the
Phosphoric Acid (Schuler, 2015).
Another huge threat to Coca Cola’s bottom line has been its interaction with India with
regards to the country’s water supply. Coca Cola has been accused of dumping toxic waste
chemicals into the Ganges River and lowering the water levels at a rate of 15 feet per year
(Blanding, 2010).
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Conclusion & Recommendations
Analysis of the Coca Cola Company confirms that the company continues to enjoy huge
revenues all over the world. However, SWOT analysis has demonstrated several issues that can
negatively impact the company’s bottom line. The chief challenge facing Coca Cola is the
public’s changing emphasis on leading a healthy lifestyle. This includes eliminating trans-fatty
acids, saturated fats, sugary drinks, and carcinogenic artificial sweeteners from their diets. Coca
Cola needs to address this issue, as their signature is the “original” sugary drink and their
bestselling diet drink contains aspartame. Coca Cola should explore different methods to sweeten
their beverages with more natural, non-toxic ingredients like Truvia, and remove all high
fructose corn syrup, food coloring, and artificial sweeteners from their products. These new,
health conscious, products could then replace the soft drinks currently being marketed to our
children in schools. The result of this decision would generate loads of positive publicity for the
company as it would demonstrate that Coke cares about the welfare of children, and that
hopefully they will grow up to be healthy adults.
As water becomes scarcer across the planet, Coca Cola should begin to explore
alternative locations for its bottling plants. It should distribute from places with abundant water
resources as opposed to areas already experiencing hardships from drought. Additionally, Coca
Cola should start investing in water renewal projects and purification procedures in the
communities they work in.
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Resources
Berry, S. (2010). How Coca-Cola’s distribution system works. Retrieved from
http://www.colalife.org/2010/12/19/how-coca-colas-distribution-system-works/
Blanding, M. (2010). The Coke Machine. NY, New York: Penguin Group.
Coca-Cola. (2011). Coca-Cola. Retrieved 2016 from http://www.thecocacolacompany.com/ourcompany/index.html
Forbes.com 2015. Retrieved 2016 from http://www.forbes.com/companies/coca-cola
Mindtools.com. (n.d.). PEST Analysis Identifying "Big Picture" Opportunities and Threats.
Retrieved 2016 from: https://www.mindtools.com/pages/article/newTMC_09.htm
Mindtools.com. (n.d.). SWOT Analysis, Discover New Opportunities, Manage and Eliminate
Threats. Retrieved 2016 from http://www.mindtools.com/pages/article/newTMC_05.htm
Porter, M. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business Review.
January 2008, p.86-104.
Schurman, L. (2015). Coca-Cola: SWOT Analysis. Retrieved 2016 from
https://www.linkedin.com/pulse/coca-cola-swot-analysis-lauren-schurman
Wei, J. (2013). Coca-Cola Should Consider Offering Snacks To Increase Beverage Sales.
Retrieved from http://seekingalpha.com/article/1593172-coca-cola-should-consideroffering-snacks-to-increase-beverage-sales
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Appendix: SWOT Diagram
Strengths
Weaknesses
High Brand Value & Fierce Customer Loyalty
Largest Beverage Company / Distribution Network
World Class Marketing & Sales
Narrow product portfolio
Reliance on carbonated beverages
Negative publicity due to adverse health effects
Opportunities
Expanding beverage portfolio
New, healthier beverage ingredients
Reduced price of materials
Threats
Healthier lifestyles
Shifting demand for healthier drinks
Water scarcity
MGT 599: Case Study #3
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MGT 599: Strategic Management
Case Study #2
Joseph Wineman
Trident University International
MGT 599: Case Study #3
2
Executive Summary:
This document serves as an in-depth strategic analysis of the Coca Cola Company. The
Coca Cola Beverage Company is the leading beverage manufacturer on the planet. It owns and
operates over 32 principal beverage concentrates and syrup plants throughout the world (The
Coca-Cola Company, 2011) and generates revenues in excess of $25 billion a year. While its
position in the beverage market is strong, it is susceptible to forces from industry, social and
cultural changes. This report identifies the primary business strategy employed by the Coca-Cola
Company and provides a critical, written evaluation of that strategy with regards to company
strengths, weaknesses, opportunities, and threats.
Introduction:
Coca Cola is the world’s largest and most valuable beverage company. It produces over
500 sparkling and still brands ranging from Dasani and Diet Coke, to PowerAde and Minute
Maid (The Coca-Cola Company, 2011) and distributes them across 200 countries around the
world. Thanks to the development of the world's largest beverage distribution system, people
consume Coca Cola beverages at a rate of 1.9 billion servings per day (The Coca-Cola Company,
2011). The adoption of a successful marketing strategy, which is one of the company’s tenant
values, has turned Coca-Cola into the world’s 4th most valuable brand, creating a total worth of
$179.9 Billion and $45.91 Billion in sales. (Forbes, 2015)
Coca Cola’s Porter Strategy:
Coca Cola follows Porter’s differentiation strategy. Differentiation is utilized when the
targeted consumer group is not price-sensitive, the market is competitive, and customer needs are
very specific. Successful differentiation can be demonstrated by displayed by manufacturing
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unique products, serving customers through new or different distribution channels, or by creating
perceived differences in the buyer’s mind through clever marketing (Spencer, 2015).
Company Strengths:
Coca Cola can list brand recognition and its distribution system as its primary strengths.
Its brand is one of the most recognizable labels in the world and is currently ranked by Forbes as
the 4th most valuable brand on Earth, creating a total worth of $179.9 Billion and $45.91 Billion
in sales. (Forbes, 2015). The design and appearance of Coke’s brand has changed very little over
its 125 year existence, as a result, it is one of the top five recognizable brands in the world
(Blanding, 2010). Coca Cola also has the largest beverage distribution system in the world and
operates over 32 beverage production facilities in over 200 countries (Berry, 2010).
The company has adopted many strategies within its marketing campaigns and packaging
with the goal of strengthening their global brand recognition and putting more of their product
into customer hands. Being the best marketing company in the world, has always been one of
Coca Cola’s value statements, and it does a lot of global advertising as a result. Coca-Cola has
ramped up its marketing tactics in an attempt to capture new markets locally. It accomplishes this
by developing and implementing different advertising campaigns for different markets in
different regions. In 2011, Coca-Cola launched a marketing campaign called “Share a Coke”
which consisted of printing common individual first names on bottle labels with the intent of
placing the company’s focus on the individual. The campaign was a huge success and reversed a
decade long decline in U.S. Coca-Cola consumption (Esteryl 2014).
Coca Cola has a good alignment concerning its generic Porter strategy and identified
company strengths. The company has utilized its marketing prowess to create a perception in the
public mind that their product creates a unique experience and can help create special moments
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in their customers’ daily lives. This perception has helped give their product weighted value
when compared to the products of Coca Cola’s competitors and has paid huge dividends towards
the company’s bottom line.
Company Weaknesses:
Coca Cola’s identified weaknesses are its narrow portfolio of products, especially when
compared to their chief industry rival, PepsiCo. This weakness has resulted in PepsiCo’s larger
annual sales revenue of $65 billion vs. Coca-Cola's $48 billion (Wei, 2013). Additionally, their
limited product mix of sugary and artificially sweetened beverages are rapidly falling out of
favor with the American public as more emphasis is placed on healthy living and the reduction of
childhood obesity. This has driven customer preferences away from carbonated, sugary
beverages and towards healthier alternatives like juices, sports drinks, and diet sodas. Coca Cola
does have diet drinks and juices in their portfolio. However, their diet drinks contain an artificial
sweetener called aspartame, which has been shown to cause cancer in lab rats when ingested in
large doses. Coca Cola also uses artificial coloring, which has also been linked to chromosomal
damage and thyroid cancer.
In recent years, Coca-Cola has attempted to address these weaknesses through the
innovation and creation of new products that tackle America’s obesity issue. The company
developed a new, healthier artificial sweetener called Truvia, which has no known negative side
effects. In 2014, Coca-Cola introduced Coke Life, a beverage with 60 fewer calories than similar
cola drinks on the market. It is the company’s first reduced-calorie sparkling beverage sweetened
with cane sugar and stevia leaf extract has 35 percent fewer calories (coca-cola.com).
Coca Cola has not done enough with regards to its alignment between its generic Porter
strategy and identified company weaknesses. Company soft drink sales are plummeting and the
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company has yet to catch PepsiCo with regards to annual income. The experimentation with new
sweeteners, and the limited introduction of healthier soft drinks does not specifically do enough
to address the customer’s growing need for healthier beverages. Their portfolio is still too limited
to overtake PepsiCo’s annual earnings, and Coca Cola has not taken the appropriate steps to
compete with Pepsi on all fronts. I would recommend that Coca Cola invest in the production of
healthy alternative snack foods and utilize the company’s world class marketing machine to
suggest that these snack foods pair best with Coca Cola brand beverages.
Company Opportunities:
Coca Cola has an opportunity to capitalize on the public’s preference for lower sugar and
all natural products by developing new products, trying to monopolize beverage contracts with
restaurant changes not owned by PepsiCo, and acquiring healthier drink alternatives.
The company has attempted to strengthen its company through identified external
opportunities in an attempt to capitalize on the growing health and fitness trend. The company
acquired Minute Maid, Capri Sun, and Honest Tea in an attempt to expand their beverage
portfolio to sell healthier, lower calorie, alternatives. Coca Cola also entered into a strategic
partnership with the Monster Beverage Corporation in order to improve their position in the
energy drink industry. They have also invested in brands like Suja, a line of premium organic,
cold‑pressed juices, and purchased a plant‑based protein beverage out of China. Finally, they
have also fully invested in the bottled water industry, producing Dasani, which accounts for 11%
of the $13 billion annual sales (Lake, 2015).
Coca Cola has a good alignment between its generic Porter strategy and identified
company opportunities. Possibly recognizing its inability to develop healthier drink alternatives
on its own, or viewing the construction and investment in new plants, as too costly, Coca Cola
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purchased the companies that can make them instead, and then utilized their world class
distribution network to transport and offer those products wherever coke products are sold. By
purchasing these healthier beverages, Coca Cola has successfully offered the world unique
products that the world is clamoring for.
Company Threats:
The company is being threatened by America’s new found health obsession. In the past,
the company had exclusivity deals with school districts to have vending machines placed in
school cafeterias and hallways, giving children unlimited access to their sugary drinks. The
company has received a lot of bad publicity for their marketing towards children. In fact, Coca
Cola has been compared to cigarette companies for projecting an image that it is okay to
consume their products when their products not only have no real nutritional value but could be
hazardous to health in regards to weight, teeth and even may cause osteoporosis from the
Phosphoric Acid (Schurman, 2015).
Another huge threat to Coca Cola’s bottom line has been its interaction with India
concerning the country’s water supply. Coca Cola has been accused of dumping toxic waste
chemicals into the Ganges River and lowering the water levels at a rate of 15 feet per year
(Blanding, 2010).
Currently, Coca Cola owns two bottling plants in California, which through 2014, had
experienced the driest four years on record. Coca Cola has been exacerbating the problem due to
the high volume water requirement during the Dasani bottling process. Coca-Cola bottling
plants, which produce Dasani, use 1.63 liters of water for every liter of beverage produced in
California (Laurie, 2014). In response to this, and complaints from drought stricken areas, Coca
Cola has adopted an aggressive strategy of Water Stewardship. In 2011, Coca Cola required all
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of 863 its bottling plants to conduct a local source vulnerability assessment in order to identify
inventory risks to the water sources supplying their facilities and the surrounding communities.
The company then partnered with local governments and communities to develop risk mitigation
actions that could be taken to help preserve the sustainability of local water sources.
Additionally, Coca Cola took steps to improve their water use efficiency to reduce the amount of
water used per liter of product produced. In 2011, the company used 293.3 billion liters of water
to make 135 billion liters of product, equaling a 20% improvement in water efficiency from the
baseline measurement they used from 2004 (Water Stewardship, 2011).
Coca Cola has a strong alignment concerning its generic Porter strategy and identified
company threats. It has taken great steps to ensure that its bottling facilities minimize the amount
of environmental damage caused by water usage, and has even begun to help treat and return the
wastewater in better shape than when it consumed it. This helps the company establish stronger
ties with the communities these plants are located in, and gives the product added value in the
eyes of those people, and environmentalists as well. Coca Cola has failed to adequately address
its contribution to America’s childhood obesity issue. While it is easy to argue that parents, and
not a huge, multibillion dollar company should be held more accountable for what their children
consume. Coca Cola must assume some blame for working so hard to get their products placed
front and center in our schools’ lunchroom cafeterias. The company needs to capitalize on its
product placement with children, but offer the healthier products that it has purchased in recent
years in place of its flagship product.
Conclusion:
Coca-Cola’s mission statement is two pronged. The company intends to refresh the world
in mind, body, and spirit, and inspire moments of optimism and happiness through their brand
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and actions. It does this through the core tenants of its vision statement. Coca Cola’s vision
statement focuses on people, portfolio, partners, the planet, profit, and productivity. It is my
position that the strategic analysis confirms Coca Cola’s mission and values statement. These
tenants have provided guidance and direction which turned into corporate actions taken by the
company to shore up their strengths, identify the weaknesses, capitalize on their opportunities,
and address their threats.
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Reference
Berry, S. (2010). How Coca-Cola’s distribution system works. Retrieved from
http://www.colalife.org/2010/12/19/how-coca-colas-distribution-system-works/
Blanding, M. (2010). The Coke Machine. NY, New York: Penguin Group.
Coca-Cola. (2011). Coca-Cola. Retrieved 2016 from http://www.thecocacolacompany.com/ourcompany/index.html
Coca-Cola. (2011).Water Stewardship. Retrieved 2016 from http://www.cocacolacompany.com/sustainabilityreport/world/water-stewardship.html#section-mitigatingriskfor-communities-and-for-our-system
Forbes.com 2015. Retrieved 2016 from http://www.forbes.com/companies/coca-cola
Lake, R. (2015). Retrieved 2016 from https://www.creditdonkey.com/bottled-waterstatistics.html
Lurie, A. (2014). Bottled Water Comes From the Most Drought-Ridden Places in the Country.
Retrieved 2016 from http://www.motherjones.com/environment/2014/08/bottled-watercalifornia-drought
Schurman, L. (2015). Coca-Cola: SWOT Analysis. Retrieved 2016 from
https://www.linkedin.com/pulse/coca-cola-swot-analysis-lauren-schurman
Spencer, T. (2015). Porter’s Generic Strategies. Tom Spencer. Retrieved 9 November 2016, from
http://www.spencertom.com/2014/07/07/porters-generic-strategies/#.WCI8qKq7rxg
SWOT Analysis (n.d.) Tripod. Retrieved November 2016 from http://Coca-ColaRemodel.Tripod.Com/Id21.Html
Strategic Choice (n.d.) OUP. Retrieved November 2016 from
Http://Www.Oup.Com/Uk/Orc/Bin/9780198782292/Ch11.Pdf
MGT 599: Case Study #1
1
MGT 599: Strategic Management
Case Study #1
Joseph Wineman
Trident University International
MGT 599: Case Study #1
2
Executive Summary:
The Coca Cola Beverage Company is the leading beverage manufacturer on the planet.
The company owns and operates over 32 principal beverage concentrates and syrup plants
throughout the world (The Coca-Cola Company, 2011) and generates revenues in excess of $25
billion a year.
Introduction:
The purpose of a company mission and vision statement and the establishment of
company values help an organization to determine who they are, who they want to be, where
they are going, and how they plan on getting there. A company mission statement defines what
an organization is, why it exists, and its reason for being. It reflects every aspect of the business,
from the variety and type of products a company offers, to pricing, quality, and service, to the
relationships the company maintains with company stakeholders. A company vision statement is
a company’s road map, specifying both what the company wants to become and by setting a
defined direction for company growth. Company values help determine whether an organization
is on the right path towards fulfilling their goals. Coca Cola has identified and defined all three
of these guiding principles and has utilized them to become the largest beverage company on the
planet.
Company Mission Statement and Analysis:
Coca-Cola’s mission statement defines what type of organization it is and why it exists.
It has been used to guide the company’s business practices, and has served the company very
well. (Coca-Cola, 2011): Coca Cola’s mission is two pronged:
•
Refresh the world in mind, body, and spirit.
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Inspire moments of optimism and happiness through our brand and
actions.
The company’s business practices can be further guided through the following beliefs:
1) Consumers drive everything that Coca-Cola does. Meaning that all
decisions are made at the appropriate level with the consumer in mind.
Without loyal customers to purchase the product, Coca Cola will ultimately
fail.
2) The Brand of Coca-Cola is the core of the business. Meaning that no matter
how many other ventures the company may undertake, it must stay true to the
product that made them who they are today.
3) We serve the consumer with the selection of non-alcoholic drinks. Coca
Cola recognizes who and what kind of company they are.
4) We will be the best marketers in the world.
5) We think and act locally. Management is decentralized to afford for faster
reaction times to real time problems. By empowering associates to make
decisions, the company also instills ownership, which makes for a better place
to work, and ultimately a better product.
6) We will lead as a model corporate citizen. Doing the right thing, regardless
of the cost, not just as individuals, but as an organization allows the company
to effect change globally, for the better.
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Company Vision Statement and Analysis
Coca Cola’s vision statement serves as the company’s road map, identifying what the
company wants to become and setting a defined direction for company growth (Coca-Cola,
2011): Coca Cola’s vision statement is as follows:
•
People: Coca Cola believes in providing its employees with a great place to work
where people are inspired to be the best. Happy Employees are better employees.
By encouraging employee engagement in all aspect of operations, the company
can ensure that they are getting the best out of their employees at all times.
•
Portfolio: Coca Cola wants to bring to the world quality beverage brands that
anticipate and satisfy people’s desires and needs. By placing the quality of their
brand above all else, Coca Cola has become the leading beverage manufacture on
the planet and can stand behind their product, guaranteeing that each individually
produced bottle or can is standardized and is the very best product that it can be.
•
Partners: Cultivate a network of customers and suppliers and together create a
mutual value. Coca Cola is more than just a United States based company, they
are the worldwide leader in nonalcoholic beverages. While figures show that
carbonated beverages are on the decline in the United States, their overseas
operations they run overseas has more than made up for it. Foreign sales are at
record highs. This can only be accomplished due to the company’s vast network
of suppliers that can provide their product to customers all over the world.
•
Planet: Be a responsible company that makes a difference in the communities.
Coca-Cola maintains close ties to the communities their products are purchased
in. They devote both time and money to improve the communities and
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environments around them. The company is environment friendly and has
developed their own line of healthy drink and mineral water (Free, 2011).
Additionally, Coca Cola has begun marketing campaigns based around how their
product can be used to improve the quality of life for those people with active life
styles. By demonstrating good corporate responsibility, Coca Cola can ensure
their company’s sustainability and ensure that they remain in compliance with all
government environmental and safety protocols. This commitment to
sustainability also boosts the company’s reputation with the public, and ensures
brand image and popularity remains high among potential customers.
•
Profit: There are two types of business models to follow. The first is to make as
much money as you can, as fast as you can, with little to no regard for future
relationships or longevity. Coca Cola has been in business for over 130 years
(Coca Cola, 2011) and subscribes to the second business model. For any publicly
owned company to maintain any sort of success for a long period of time, it must
take good care of its shareholders with regards to honesty, and returns on financial
investment.
•
Productivity: Be a highly effective and fast-moving company. Companies must
be able to change with the times, be innovative and responsive to the customer
markets. Inability to do so will lead to a drop in sales and lost profits.
Company Values Statement and Analysis
The culture of a company can make or break the progress and success of it. Coca-Cola
demands a winning attitude toward the morality and integrity of its brand. Company values help
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to determine whether an organization is on the right path towards fulfilling their goals. Those set
of values that Coca-Cola embraces are as follows (Coca-Cola, 2011):
•
Leadership: The leadership must have the ability and courage to shape a better
future. Coca Cola executives have a responsibility to their stakeholders to provide
guidance and direction to ensure that their company remains innovative and
progressive in all that their company touches.
•
Collaboration: To use collaboration efforts of collective genius. One of the
hallmarks of a good company is open and transparent communication among its
associates. The best ideas come from those individuals that see, touch, and
experience the product every day. Collaboration is key to optimization, which can
lead to lower production costs, more efficient operations, safer work
environments, and an overall better product.
•
Integrity: Be real. A company must be willing to stand behind their product at all
times. After all, the quality and price of their product has a direct impact on public
perception and can make or break a company.
•
Accountability: There must be both positive and negative ramification for any
and all decisions that directly impact company stakeholders. A successful
company celebrates its victories and achievements, no matter how big or how
small, and takes accountability for any failures with a published plan to eliminate
those failures in the future.
•
Passion: Commitment in heart and mind. The company, as a whole, must be
100% committed to make the best possible product they can make. An
organization is only as strong as its weakest link.
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Diversity: To ensure diversity as inclusive as our brands. As a global company,
Coca Cola has a responsibility to be a leader in terms of race and gender relations.
Besides being the right thing to do, it’s a bad business practice to deliberately not
market a product towards a group of people based solely on the color of their skin
or gender.
•
Quality: To guarantee the quality of what Coca Cola produces. The beverage the
public holds in their hand is a direct reflection of Coca Cola, and is far more
powerful than any marketing campaign and marketing agency could dream up. If
the product tastes great and has the ability to make a customer desire more, than
Coca Cola is no danger of going out of business any time soon.
Alignment of Mission, Vision, Values, and Goals with Stakeholders' Interests
Coca Cola’s adopted strategies are very much aligned with stakeholder interests as
evidence by its recognition as the 4th most valuable brand in the world by Forbes Magazine. The
mission, vision, and values statements build off of each other and articulately create a roadmap
for the organization to navigate in order to achieve their desired goal of remaining the premier
beverage company in the world. This can easily be observed by the company’s huge global
popularity status and fierce customer loyalty to the brand. Despite the fact that Pepsi tends to be
Coke in blind taste tests, Coca Cola continues to outsell its closest competitor as Coke and Diet
Coke are the two best-selling beverages on the Market (dividend.com, 2015). By following the
tenants of their stated values, Coca Cola has leveraged the international market in order to
overcome slower domestic sales (Ensler, 2016).
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Recommended Changes:
Coca Cola’s Net income fell to $1.48 billion, or 34 cents per share, from $1.56 billion, or
35 cents per share, in the same period a year ago. Revenue fell 4% to $10.28 billion, slightly
below Wall Street estimates of $10.29 billion (Ensler, 2016). As the world becomes more and
more health conscious, public perception about sugary drinks and beverage preferences, in
general, are changing. In fact, due to adverse health effects (Free, 2011), many people are turning
away from carbonated drinks with large sugar content and searching for healthier alternatives.
As growth in the carbonated soft drinks market slows and consumer's preference shifts
towards healthier beverages, Coca Cola needs to diversify its portfolio to establish a stronger
presence in what customers are buying. If Coca-Cola could create an ad campaign to change the
“carbonated” ideals they have to include healthier drinks. This would require it to follow the
tenants of its business practices to best meet the customer demand.
Conclusion:
The mission, vision, and values statements put in place by Coca Cola direct the business
strategies developed by top level executives and provide guidelines for the general day to day
operations of the company. Coca-Cola has utilized its vision and values statements to emphasize
its brand over its product, utilizing its practice to be the best marketer in the world to sell
“happiness” in a bottle rather than a drink. Their practice of making human connections,
constantly innovating while staying true to the company’s principles has directly contributed to
Coca-Cola’s position as a world-wide industry leader, even after 125 years.
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Resources
Coca-Cola. (2011). Coca-Cola. Retrieved from http://www.thecocacolacompany.com/ourcompany/index.html
Datson, T. (2004). Coca - Cola Admits That Dasani is Nothing But Tap Water. Retrieved from
http://www.commondreams.org/headlines04/0304-04.htm
Dividends.com (2015). Coca Cola Vs. Pepsi: Comparing Sales, Earnings & More. Retrieved
October 16, 2016 from: www.dividend.com/how-to.../7-charts-that-compare-coca-colaand-pepsico-ko.com
Gensler, L. (2016). Coca-Cola Sales are Fizzling Amid Scramble to Move Away from Soda.
Retrieved October 14, 2016: www.forbes.com/sites/laurengensler/2016/04/.../coca-colafirst-quarter-earnings.com
Hammonds, K. (2007). Michael Porter's Big ideas, Fast Company, 44, Retrieved on October 15,
2016 from: http://www.fastcompany.com/magazine/44/porter.html
Oxford University Press. (2011). Porter's Five Forces. Retrieved from
http://www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_11.htm
Strategic Choice (N.D) OUP Retrieved October 16, 2016 from
Http://Www.Oup.Com/Uk/Orc/Bin/9780198782292/Ch11.Pdf
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